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     TOP NEWS: China will cut import taxes on 706 goods from Jan 1, and scrap
export tariffs on 94 items of products, including fertilizers, iron ore, coal
tar, and wood pulp, according to an announcement on the website of the finance
ministry today.
     TRADE WAR: China and the U.S. made progress after holding  vice-minister
rank dialogue on Sunday to exchange views on issues of mutual concerns,
including trade balance and strengthening intellectual property protection, the
Ministry of Commerce said in a statement on its website. The two sides also
discussed the arrangements for the next call and mutual visits, the ministry
said.
     LIQUIDITY: The People's Bank of China (PBOC) injected CNY20 billion by
14-day reverse repos today, a sixth straight trading day that the central bank
has added liquidity by open market operations(OMOs). It resulted in a net drain
of CNY140 billion today due to the maturity of CNY160 billion of reverse repos,
according to Wind Information. The OMO is to offset the issuance of government
bonds and other factors, the central bank said.
     RATE: The 7-day weighted average interbank repo rate for depository
institutions (DR007) increased to 2.6290% from Friday's close of 2.5800%, Wind
data showed. The overnight repo average decreased to 2.2639% from Friday's
2.4514%.
     Yuan: The yuan depreciated to 6.8965 against the U.S. dollar from Friday's
close of 6.9019. The PBOC set the dollar/yuan central parity rate at 6.9006
today, compared with 6.8825 on Friday.
     STOCKS: The benchmark Shanghai Composite Index fell 0.43% to 2,527.01. Hong
Kong's Hang Seng Index decreased 0.40% to 25,651.38.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.3525%, up from the closing price of 3.3150% on Friday, according to Wind
Information.
     FROM THE PRESS: China's draft foreign investment law stipulates that
Chinese authorities shall not force foreign investors to transfer technology by
administrative means, Xinhua News Agency reported on Sunday. The new law will
encourage technical cooperation on a voluntary basis, and protect the
intellectual property rights of foreign enterprises investing in China, Xinhua
said.
     China must keep macroeconomic control at an appropriate level and not let
it be too rigid or loose, Wallstreetcn reported on Saturday citing Han Wenxiu,
deputy director of the General Office of the Leading Group for Financial and
Economic Affairs of China. Han also pointed out that China's total GDP in 2018
is expected to exceed CNY90 trillion, or about US$13.7 trillion, with GDP per
capita at US$9,990. The total new jobs created this year was 13 million, with
urban unemployment rate below 5%, Han was cited as saying.
     China should temporarily let the deficit exceed the 3% ratio of the GDP to
stabilize economic growth, said China Business News on Sunday citing Huang
Yiping, a member of the PBOC's Monetary Policy Committee. The health of the
balance sheet is more important than the deficit ratio, Huang was reported as
saying. The balance sheet of the central government is healthy, but that of
local government is not, the newspaper reported Huang as saying.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]