MNI China Daily Summary: Friday, November 15
EXCLUSIVE: Beijing’s stimulus measures will likely maintain iron ore prices at about USD100 a tonne until 2025, while steel prices could see short-term upward momentum as Chinese exporters rush shipments ahead of any potential renewed trade war with the U.S., a policy advisor told MNI.
DATA: Retail sales rose 4.8% y/y in October to hit an eight-month high, surging from September's 3.2% gain and beating the 3.8% forecast, data released by the National Bureau of Statistics (NBS) showed. Industrial production increased 5.3% y/y in October, edging down from September's 5.4% growth and missing the expected 5.5%. Fixed-asset investment registered a 3.4% y/y increase in the first 10 months, unchanged from the reading over Jan-Sep and lower than the 3.5% consensus.
POLICY: Authorities are optimistic about the future trend of the real-estate market, despite property investment falling 10.3% in October, after a package of measures to promote the sector proved effective, according to NBS Spokesperson Fu Linghui.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY981 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY968.8 billion after offsetting the maturity of CNY12.2 billion today. There is another CNY1450 billion 1-year MLF maturing today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.7230% from 1.7174% on Thursday, Wind Information showed. The overnight repo average increased to 1.4772% from 1.4528%.
YUAN: The currency strengthened to 7.2310 against the dollar from 7.2409 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 7.1992 on Friday, compared with 7.1966 set on Thursday. The fixing was estimated at 7.2471 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.0700%, up from Thursday's close of 2.0643%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index was down 1.45% to 3,330.73, while the CSI300 index fell 1.75% to 3,968.83. The Hang Seng Index edged down 0.05% at 19,426.34.
FROM THE PRESS: China’s deficit-to-GDP ratio is expected to exceed 3% next year, with the possibility to approach or even exceed historical high, Economic Information Daily reported citing Guo Kai, executive director of China Finance 40 Forum. Meanwhile, authorities should increase the issuance of ultra-long-term special treasuries to support major infrastructure projects given the reasonable financing cost, the daily said citing Guo. The central bank will also likely lower the policy interest rate and inject medium- and long-term liquidity via a reserve requirement ratio cut and secondary market treasury trading to support government bond sales, the newspaper said citing Wang Qing, analyst with Golden Credit Rating.
The Shanghai Stock Exchange will revise the SSE 180 Index to make it a benchmark representative index and increase its investment value, Securities Daily reported. The reversion will increase the weights of tech-related companies and improve the index’s yield and coverage of market captialisation, the newspaper said. The index, created in 2002, consists of 180 large-cap blue-chip companies, covering 61% of market value, 63% of revenue, 82% of profit and 76% of dividends, the newspaper said.
Local governments have completed a total of 2.85 million units in housing delivery programme as of Nov 13, largely improving market expectations, CCTV News reported citing the Ministry of Housing. The housing delivery rate in 74 provinces and cities, including Shanghai, Fujian and Gansu, has exceeded 80%, according to CCTV News.