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(Z1) Bearish Trend Condition

AUSSIE 10-YEAR TECHS

(Z1) Bearish Price Sequence

AUSSIE 3-YEAR TECHS

(Z1) Off Recent Highs

US 10YR FUTURE TECHS

(Z1)‌‌ Support Appears Exposed

     TOP NEWS: China has agreed to allow greater foreign ownership in financial
entities as part of the trade deal reached during U.S. President Donald Trump's
visit to Beijing. Overseas investors can now boost their shareholdings up to
51%, from the previous 49% cap, in securities businesses, investment funds and
futures brokerages, Vice Finance Minister Zhu Guangyao said at a press
conference on Friday. The limits will be scrapped altogether after three years,
he said. Regulators are also removing curbs on foreign investment in Chinese
banks and asset management companies, so they will be subject to the same
shareholding limits as domestic entities, Zhu said. Restrictions on investments
in insurance companies will also be eased, then removed, in five years, he said.
China will also gradually cut tariffs on imported vehicles, starting with
"special-purpose" vehicles -- a category that includes vans, trucks and
commercial vehicles -- as well as on new-energy vehicles, Zhu said.
     TOP NEWS: The newly launched Financial Stability and Development Committee
under the State Council will be a major force in deciding the priorities for new
financial regulation policies while the individual financial regulators who are
represented on the committee -- the People's Bank of China, the China Banking
Regulatory Commission, the China Securities Regulatory Commission, and the China
Insurance Regulatory Commission -- will implement the policies, the Financial
News, a newspaper managed by the PBOC, reported Friday. Given the PBOC is also
conducting some of the same functions as the committee, their respective tasks
and functions need to be further clarified and boundaries set, the newspaper
said. It cited analysts predicting that the first major task for the committee
will be to strengthen regulation of financial holding companies, which offer
services in more than one regulatory area. Many of these companies arbitrage
regulation to reduce supervision and so create bigger financial risks in the
process. PBOC head Zhou Xiaochuan has stressed the need to clamp down on such
companies, the report noted. (Financial News)
     POLICY: China's corporate and local government debt swap push has had only
a limited impact on reducing corporate debt burdens so far, with the plan facing
several obstacles to success given the low rate at which currently contracted
swap agreements are being carried out and because the level of enthusiasm shown
for the program by banks and companies has waned.
     RATES: Money market rates were higher on Friday after the PBOC injected a
net CNY50 billion via open-market operations. The seven-day repo average was
last at 2.9342%, up from Thursday's average of 2.9026%. The overnight repo
average was at 2.7399% compared with Thursday's 2.6630%.
     RATES: The People's Bank of China injected CNY40 billion in seven-day
reverse repos, CNY20 billion in 14-day reverse repos and CNY20 billion in 63-day
reverse repos via open-market operations Friday. This resulted in a net
injection of CNY50 billion on the day, as a total of CNY30 billion in reverse
repos matured on Friday. It was the first day this month the PBOC made a net
injection via open-market operations. The PBOC drained a total of CNY230 billion
in liquidity via open-market operations this week. The CFETS-ICAP money-market
sentiment index ended at 49 on Thursday, slightly up from 47 at Wednesday's
close. The lower the reading, the better the liquidity conditions in the
interbank market.
     YUAN: The yuan rose against the U.S. dollar Friday after the People's Bank
of China set a stronger daily fixing. The yuan was last at 6.6373 against the
U.S. unit, rising 0.05% compared with the official closing price of 6.6391 on
Thursday. The People's Bank of China set the yuan central parity rate against
the U.S. dollar at 6.6282 Friday, stronger than Thursday's 6.6325. The PBOC set
the fixing stronger in two of the five trading days this week.
     BONDS: The yield on benchmark 10-year China government bonds was last at
3.8950%, down from the previous close of 3.9000%, according to Wind, a financial
data provider.
     STOCKS: Stocks rose, led higher by the wine-making and coal sectors. The
benchmark Shanghai Composite Index closed up 0.15% at 3,432.67. Hong Kong's Hang
Seng Index was 0.11% higher at 29,168.08.
     FROM THE PRESS: The yuan is expected to fluctuate in a small range in the
near term even though the dollar could strengthen, the China Securities Journal
reported Friday. The short-term outlook will depend largely on the trend of the
dollar, and so the U.S. tax reform process will be a key factor affecting the
yuan, unidentified market experts were cited as saying. The two-way fluctuation
of both the dollar index and the yuan against the dollar will be more
pronounced, the experts told the newspaper. The report cited Guotai Junan
Securities as saying that strong U.S. economic fundamentals, such as the high
October PMI and consumer confidence index, mean there is a greater chance that
U.S. tax reform will be approved, as well as the possibility that a Fed interest
rate hike in December could cause the dollar to strengthen, so the room for the
yuan to appreciate is not large. But the newspaper cited other analysts as
saying that China's strong economic growth and a positive outlook for its trade
would help stabilize the yuan. (China Securities Journal)
     China needs to work hard to achieve its goal of an "all-around opening up"
of the economy, Vice Premier Wang Yang wrote in an extensive article published
in the official People's Daily on Friday. How to switch from China's old growth
engines to a new growth model is the key to its economic development amid the
global economic recovery, Wang said. China needs to better integrate the opening
up of its manufacturing and service sectors, he said. The manufacturing sector
needs to open up further, except for some "sensitive fields," by reducing
restrictions on foreign ownership and the business scope of companies doing
business in China, Wang noted. Wang also stressed that China needs to innovate
its outbound investment methods. Some Chinese companies' outbound investments
are unreasonable and create potential risks, so China will strengthen guidance
on investments and overseas mergers and acquisitions, he said. (People's Daily)
     China is not purposely pursuing a large trade surplus with the United
States, Chinese Premier Li Keqiang stressed in his meeting with U.S. President
Donald Trump on Thursday, the official Xinhua News Agency reported Friday. China
and the U.S. need to further open up their markets to each other and create a
fair and competitive business environment, Li said, adding that China would
welcome the U.S. expanding its services trade and high-tech product exports to
China. Trump said during his visit to Beijing that he hopes the two countries
can strengthen cooperation and facilitate a fair and balanced economic and trade
relationship. (Xinhua News Agency)
     Cooperation is the only correct choice for China and the United States, and
a win-win approach could create a better future for the bilateral relationship,
Xinhua News Agency said in a late-night commentary Thursday. Room for
cooperation is large, with economic and trade cooperation the ballast of the
relationship, it said. On Wednesday, China and the U.S. signed mutual investment
agreements and contracts worth more than $250 billion, breaking a historical
record and reflecting the great potential for cooperation between the two
nations, it said. (Xinhua News Agency)
--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com
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