MNI China Daily Summary: Friday, September 08

EXCLUSIVE: Local governments are weighing whether to scrap rules limiting the purchase of multiple houses by homeowners should the latest mortgage rule relaxations fail to stimulate sales during the Sept-Oct peak season, however, any change will likely occur in Q4, policy advisors and market analysts told MNI.

EXCLUSIVE: China will pursue steady internationalisation of the yuan due to concerns over FX stability and the limited value in holding trading partner currencies should expansion occur too rapidly, a policy advisor told MNI.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY363 billion via 7-day reverse repos, with the rates unchanged at 1.80%. The operation has led to a net injection of CNY262 billion after offsetting the maturity of CNY101 billion reverse repo today, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.8625% from 1.9508%, Wind Information showed. The overnight repo average increased to 1.8996% from the previous 1.8333%.

YUAN: The currency weakened to 7.3415 against the dollar from 7.3279 on Thursday. The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.2150, compared with 7.1986 set on Thursday. The fixing was estimated at 7.3260 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.7050%, up from 2.7025% at Thursday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.18% to 3,116.72 while the CSI300 index fell 0.49% to 3,739.99. The Hang Seng Index was down 1.34% to 18,202.07.

FROM THE PRESS: Authorities have met with futures traders to discuss apparent irregular pricing in the iron ore futures market, according to the Securities Times. The National Development and Reform Commission (NDRC) told traders since mid-august regulators observed the price of futures had increased quickly without any change in fundamental supply or demand and, as a result, faced downward pressure later in the year. Authorities said they would severely crack down on illegal activity, and reminded traders to trade rationally and not engage in excessive speculation. (Source: Securities Times)

China recorded a 1.38% m/m drop in forex reserves to USD3.2 trillion in August, according to data from the State Administration of Foreign Exchange (SAFE). Officials said reserves decreased due to macroeconomic and monetary-policy expectations from major economies as well as the effects of exchange rate translation and changes in asset prices. In future, SAFE believes China's economy will rebound, conducive to maintain basic stability in the scale of foreign exchange reserves. (Source: Yicai)

China will work with Italy to deepen trade and investment and enrich bilateral economic and trade cooperation between the two countries, Ministry of Commerce spokesperson He Yadong said at a recent press conference. When asked a question regarding Italy’s potential exit from the Belt and Road Initiative, He said the Italian foreign minister had met with Chinese foreign minister Wang Yi and both sides reached consensus to improve the level of bilateral trade and mutual investment. On Australia, He noted China and Australia should pursue win-win economic and trade cooperation as both economies are highly complementary. (Source: Yicai)