MNI China Daily Summary: Friday, October 27

     TOPS NEWS: The People's Bank of China injected CNY60 billion in seven-day

reverse repos, CNY30 billion in 14-day reverse repos and CNY50 billion in 63-day

reverse repos via open-market operations on Friday. It was the first time that

the PBOC has used 63-day reverse repos in its open-market operations.

     TOP NEWS: Chinese industrial companies saw profit growth accelerate at a

record-high level in September on rising production, sales and prices, the

National Bureau of Statistics (NBS) said Friday. The combined profits of

industrial firms rose 27.7% year-on-year to CNY662.18 billion in September, up

3.7 percentage points from the 24.0% y/y growth rate in August. The September

growth rate was the highest since data on industrial profits became available in

February 2012, according to Wind Information.

     RATES: The Ministry of Finance sold CNY15 billion in 91-day treasury bills

at a yield of 3.4561% in an auction on Friday. The yield was higher than the

3.3578% for bonds with the same maturity in the secondary market on Thursday.

     RATES: Money market rates were mixed on Friday after the PBOC injected a

net CNY90 billion via open-market operations. The seven-day repo average was

last at 2.8464%, down from Thursday's average of 2.9714%. The overnight repo

average was at 2.7354% compared with Thursday's 2.7163%.

     YUAN: The yuan was weaker against the U.S. dollar on Friday after the

People's Bank of China set a much weaker daily fixing. The yuan was last at

6.6539 against the U.S. unit, weakening 0.27% compared with the official closing

price of 6.6357 on Thursday. The People's Bank of China set the yuan central

parity rate against the U.S. dollar at 6.6473 Friday, much weaker than

Thursday's 6.6288. 

     BONDS: The yield on benchmark 10-year China government bonds was last at

3.8100%, up from the previous close of 3.7750%, according to Wind, a financial

data provider.

     STOCKS: Stocks rose, led higher by the winery and financial services

sectors. The benchmark Shanghai Composite Index closed up 0.27% at 3,416.81.

Hong Kong's Hang Seng Index was 0.64% higher at 28,383.70.

     FROM THE PRESS: Ministry of Commerce spokesman Gao Feng said Thursday at a

press briefing that Tesla is working with regulators in Shanghai to set up a

factory in that city. He would not confirm or deny reports that China would

allow foreign companies to establish factories by themselves and not be required

to have a Chinese company as a partner. Asked if U.S. officials would try to

make a breakthrough during President Donald Trump's visit that would allow

American factories to avoid the requirement to have a Chinese partner, Gao said

both sides are speeding up the work process to make Trump's visit achieve "more

consensus and solid results." U.S. Secretary of Commerce Wilbur Ross will lead

the U.S. trade negotiating team during Trump's visit, according to Gao.

     Ministry of Commerce spokesman Gao Feng, responding to a question at a

press conference Thursday on why China's trade with North Korea increased 3.7%

y/y in the first nine months of this year, said "inertia exists in trade

activities, it takes time for the effects of any trade measure to emerge,"

according to a transcript on the ministry's website. Gao stressed that China's

determination to implement the United Nation Security Council's sanctions on

North Korea is "serious" and "beyond question."

     China has finalized smart manufacturing pilot programs for 2017, the

Ministry of Industry and Information Technology said, according to a front-page

report in the Economic Information Daily on Friday. A total of 97 cities and

districts of Beijing, Shanghai, Guangdong, Zhejiang, Jiangsu, and Xinjiang were

included in the pilot programs, the newspaper said. The smart manufacturing

programs will include sectors ranging from petrochemicals, steel, aviation,

car-manufacturing, medicine, and new energy. (Economic Information Daily)

--MNI Beijing Bureau; +86 10 85325998; email: he.wei@marketnews.com

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

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