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MONTH-END EXTENSIONS

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Late Session Selling

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Consolidation Mode

     TOP NEWS: China passenger car sales dropped for the 7th month by 17.71% y/y
in January, according to data by China Association of Automobile Manufacturers.
Sales of new energy cars rose 140% y/y to 95,700. Consumers delayed car purchase
around the Chinese New Year against the economic slowdown, contributing to the
largest fall in seven years, according WallstreetCN.
     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations
for a sixth day. Liquidity remain unchanged, as no reverse repo matured today,
according to Wind Information. The PBOC said factors including cash withdrawals
have pushed up total liquidity in the banking system. 
     RATE: The 7-day weighted average interbank repo rate for depository
institutions (DR007) increased to 2.2597% from the close of 2.2174% on Friday,
Wind data showed. The overnight repo average rose to 1.8245% from 1.7096%
Friday.
     Yuan: The yuan appreciated to 6.7671 against the U.S. dollar from the close
of 6.7802 on Friday. The PBOC set the dollar-yuan central parity rate at 6.7659
today compared with 6.7623 set last Friday.
     STOCKS: The benchmark Shanghai Composite Index rose 2.68% to 2,754.36. Hong
Kong's Hang Seng Index rose 1.60% to 28,347.01.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.118%, up 3.3 bps from the close of Friday, according to Wind.
     FROM THE PRESS: The PBOC will likely expand its balance sheet in 2019,
continuing to add liquidity and encourage credit expansion via reverse repo,
Medium-term Lending Facility(MLF), Targeted MLF and other tools, the Securities
Times said. Although seasonal factors are pushing new loans and money aggregates
to historical highs, it may also indicate a credit easing turning point, which
will play a positive role boosting growth and supporting financial assets, the
paper said.
     Financial institutions need interest rate liberalization if they are to
provide sustainable services to smaller private companies, the Paper reported on
Saturday citing Huang Yiping, former advisor to the PBOC. Relaxation of the
rules will increase rates in the formal financial sector whilst lowering them in
the informal areas such as shadow banking, the newspaper  cited Huang as saying.
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]