MNI China Daily Summary: Friday, November 23

     POLICY: China's authorities will further open up free-trade zones and level

the playing field for foreign investors, as they also look to expand business

areas where overseas financial institutions can invest, officials said Friday.

The People's Bank of China(PBOC) will implement new policies aimed at opening up

financial markets in free-trade zones, Xu Zhong, director of the PBOC research

bureau, told a press conference announcing government measures to develop

China's 12 free-trade zones.(See full story:

https://www.marketnews.com/node/1838986)

     LIQUIDITY: The PBOC skipped open market operations (OMOs) for the 21st

straight day Friday, leaving liquidity unchanged, as no reverse repos are set to

mature, according to Wind Information. The central bank said liquidity in the

banking system remains reasonable and ample.

     RATE: The 7-day weighted average interbank repo average rate for depository

institutions (DR007) decreased to 2.5741% from Thursday's close of 2.6049%, Wind

Information showed. The overnight repo average decreased to 2.3275% from

Thursday's 2.4397%.

     YUAN: The yuan depreciated against the dollar Friday, as USDCNY rose to

6.9450 against Thursday's close of 6.9350. The PBOC earlier set the dollar/yuan

central parity rate lower for a second day at 6.9306 Friday, compared with

Thursday's 6.9391.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.3950%, up from the closing price of 3.3900% on Thursday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 2.49% lower at

2,579.48. Hong Kong's Hang Seng Index fell 0.35% to 25,927.68.

     FROM THE PRESS: The PBOC's 20+ day suspension of reverse repos, the longest

run of passes since 2016, does not mean a tightening of monetary policy,

Securities Daily said in a front-page commentary Friday, responding to the

market concerns over current liquidity. The PBOC's current focus is to guide

liquidity released into the real economy, therefore keeping liquidity at a

reasonable and ample level is central to keeping its monetary transmission

mechanisms flowing, the Daily said. (Link to the story: https://bit.ly/2KuCvMA)

     It is more important right now to help private-sector enterprises obtain

financing than to lower their financing cost, China Securities Journal said

Friday. Private-sector firms are struggling with insufficient collateral and

limited financing channels and currently rely mainly on bank loans. Therefore,

it is necessary to moderately expand the scope of eligible collateral and aid

the private sector via bonds, credit and equity financing. (Link to the story:

https://bit.ly/2PPAmAE)

     Instead of further tightening regulations, China's government should focus

on a good supply of housing in order to curb high housing prices, The Beijing

News reported Friday, citing Li Tie, chief economist at the National Development

and Reform Commission's City and Small Town Centre. Large-scale speculation in

the housing market has been curbed under purchase limits and tight credit, and

the impact will be felt for many years, the newspaper said citing Li. - House

price pressure can be alleviated through better town and transportation

planning, Li adds. For example, building city railways to connect small towns

around the downtown area can shorten commuting time and encourage home buyers.

(Link to the story: https://bit.ly/2KuCvMA)

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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