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MNI (London)

EXCLUSIVE: More Chinese cities with rising home prices may tighten rules as Beijing cracks down on speculation to contain asset bubbles although local authorities, wary of systemic risk in the real-estate industry, could step in to help major developers facing a liquidity crunch, advisors said.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY50 billion via 7-day reverse repos with the rate unchanged on Tuesday. This resulted in a net drain of CNY30 billion given the maturity of CNY80 billion of reverse repos today, according to Wind Information. The operation aims to maintain stable liquidity before the Chinese New Year, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.4712% from the 2.3461% on Monday, Wind Information showed. The overnight repo average fell to 1.7410% from the previous 1.8941%.

YUAN: The currency strengthened to 6.4487 against the dollar from 6.4583 on Monday. The PBOC set the dollar-yuan central parity rate lower at today 6.4533. This compares with the 6.4678 set on Friday.

BONDS: The yield on 10-year China Government Bond was last at 3.2750%, down from Monday's 3.2850%, according to Wind Information.

STOCKS: The Shanghai Composite Index rallied 2.01% to 3,603.49 while the CSI300 index gained 2.19% to 5,686.25 Hang Seng Index edged up 0.53% to 29,476.19.

FROM THE PRESS: The PBOC should ensure interbank liquidity after the holiday period as a slew of business debts, monetary instruments and bonds mature in March and April, the Shanghai Securities News reported. The PBOC has reduced the size of injections due to lower demand for cash and increased fiscal spending before the Lunar New Year holiday, pumping in CNY10 billion on Monday following CNY50 billion on Sunday, the newspaper said.

China's credit lending in January may have increased to CNY3.5 trillion, an increase of CNY160 billion from a year ago as corporate demand surged, the China Securities Journal reported citing Wang Jingwen, a senior analyst from China Minsheng Bank. Commercial banks were likely to have boosted lending last month as many loans last year were carried over and executed in January, the newspaper wrote citing Li Chao, chief economist from Zheshang Securities. Regulators may have applied marginal tightening to prevent a further rise in macro leverage ratios, so the growth rate of total social financing may have dropped by 0.2 percentage points from the previous month to 13.1%, Li said.

The Biden administration should abandon the "rude manners" of its predecessor and create new space for the two countries to engage in benign rules-based competition, the Global Times said in an editorial. Responding to President Biden's "extreme competition" remark regarding dealing with China. the editorial said Biden had set a bottom line of avoiding a major power conflict by replacing Trump's approach with international rules. China is not afraid of this approach, the newspaper added.

MNI London Bureau | +44 203-586-2225 | les.commons@marketnews.com
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MNI London Bureau | +44 203-586-2225 | les.commons@marketnews.com
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