MNI China Daily Summary: Friday, October 29

LIQUIDITY: The People's Bank of China (PBOC) injected CNY200 billion via 7-day reverse repos with the rate unchanged at 2.2% on Friday. The operations lead to a net injection of CNY100 billion after offsetting the maturity of CNY100 billion reverse repos, according to Wind Information. The operation aims to keep month-end liquidity stable, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.3400% from the close of 2.3249% on Thursday, Wind Information showed. The overnight repo average rose to 2.1220% from the previous 1.9355%.

YUAN: The currency weakened to 6.4009 against the dollar from 6.4006 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 6.3907, compared with the 6.3957 set on Thursday.

BONDS: The yield on the 10-year China Government Bond was last at 2.9950%, lower from 3.0000% of Wednesday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index increased 0.82% to 3,547.34, while the CSI300 rose 0.92% to 4,908.77. The Hong Kong's Hang Seng Index lost 0.70% to 25,377.24.

FROM THE PRESS: China's move to increase coal production will fill the supply and demand gap in the medium term, which will stabilize market expectation and curb the impulse to stockpile, though coal prices are still unlikely to fall quickly, the Securities Daily reported citing Ming Ming, chief analyst at CITIC Securities. China's recent daily coal output exceeded 11.5 million tons, an increase of over 1.2 million tons from mid-September, hitting a new high this year, after the National Development and Reform Commission released 18 documents in 10 days to intervene, the newspaper said. Many coal mines took the initiative to lower the sales prices by as much as CNY360 per ton, the newspaper said. Ming suggested the management of the futures market should be strengthened, including limiting holdings and increasing margin to curb speculation, the newspaper said.

China has not opened the "floodgate" controlling credit to the property industry, nor will it ease its regulatory efforts, the Economic Daily said citing interviews of officials and lenders. While mortgage rates in about 20 cities have declined, including Guangzhou and Shenzhen, they were due to declining demand as falling home prices caused buyers to sideline from purchases, the newspaper said citing Deputy Director Zeng Gang of the state-affiliated thinktank National Institution for Finance & Development. Regulators were also ordered to prioritize loans to first-time buyers, so lenders have given more favorable rates, Zeng said. First-time buyers accounted for 92% of the home purchases at the end of July, he said. Mortgage rates in Beijing have not fallen, the newspaper said. Regulators are still toughening measures to prevent misusing loans to purchase properties, said the daily.

China must warn the U.S. that it is pushing the bilateral relations to a confrontational direction as some U.S. politicians have successively hyped up the idea of so-called "Taiwan's participation in the United Nations system" and ignored the facts to slander China as a threat to regional stability, said the party-run newspaper People's Daily in a commentary attributed to a pen name Zhong Sheng which is used when the leadership wishes to register its view. The Taiwan issue concerns China's sovereignty and territorial integrity, and China's core interests, which is the most important and sensitive issue in Sino-U.S. relations, the newspaper said. If the U.S. continues its wrongdoings, it will not only pose a huge subversive risk to the easing of the current relations, but also will seriously damage the peace of the Taiwan Strait and the U.S. interest, the newspaper said.