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Reverse Repo Operations

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Needle Still Points South

COMMODITIES

Oil Holds Close to Highs, Recovery Secured

     TOP NEWS: China's benchmark Shanghai Composite Index jumped 5.60%, the most
in three and half years, to 2,961.28, back to 2,900, the level unseen since July
25, 2018. The market continued its notable rally since last Friday on the back
of the weekend's Sino-U.S. trade developments and growing optimism surrounding
the potential for a Trump-Xi summit. While Hong Kong's Hang Seng Index rose
0.50% to 28,959.30, the highest since June 25 last year.
     TRADE: China-U.S. trade talks have made substantial progresses on specific
issues in technology transfer, intellectual property protection, non-tariff
trade barriers, service sector, agriculture, and exchange rates, Xinhua News
Agency said. On this basis, the two sides will follow the instructions of the
two heads of states to take the next step, Xinhua News Agency reported today.
Xinhua also commented that the trade talks will be harder at the final stage,
and new uncertainties could occur.
     POLICY: Chinese commercial banks are ordered to set annual targets of
boosting lending to private enterprises by end-March. State-owned commercial
banks should play a leading role to achieve a more than 30% y/y growth in the
balance of SME loans, said China Banking and Insurance Regulatory Commission at
a presser in Beijing today.
     POLICY: As downward pressure on the economy picks up, China's authorities
are increasing measures to reduce wage delays by some businesses, Xin Guobin,
Vice Minister of Industry and Information Technology said at a presser in
Beijing today. The actions aim to stabilize employment and social stability,
whilst ensure companies continue operating, the officials said. The government
is working to establish a long-term mechanism and improve legislation to tackle
the issue, they said.
     LIQUIDITY: The People's Bank of China (PBOC) injected CNY40 billion via
7-day reverse repos, resulting in a net injection of CNY40 billion as no reverse
repos mature, according to Wind Information.
     RATE: The 7-day weighted average interbank repo rate for depository
institutions (DR007) increased to 2.6400% from the close of 2.5668% on Friday,
Wind data showed. The overnight repo average rose to 2.7000% from 2.4276%
Friday.
     Yuan: The yuan appreciated to 6.6941 against the U.S. dollar from the close
of 6.7186 on Friday, the strongest level since July 17, 2018, helped by the
progress in the Sino-U.S. trade talks. The PBOC set the dollar-yuan central
parity rate at 6.7131 today, lower than the 6.7151 set last Friday.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.18%, up 2.5 bps from the close of Friday, according to Wind.
     FROM THE PRESS: China should take diversified regulatory measures to
control bill financing, as the situations in different provinces vary, said
Xinhua News Agency today citing Sheng Songcheng, a former PBOC advisor. China
should give certain supports to bill financing, as it helps underpin the real
economy, Xinhua said citing Sheng.
     Chinese President Xi Jinping urged deepening financial supply-side
structural reform at a Politburo meeting Friday, including developing customized
financial products and boosting the number of small and medium-sized financial
institutions, Xinhua News Agency reported Saturday. Xi also underlined the need
to balance stabilizing economic growth and preventing risks, further opening up
the financial sector, enhancing the financial capability of serving the real
economy, whilst promoting the healthy development of the financial industry, the
newspaper said.
     China's central bank should not lower the deposit and lending rates in the
near term, the Economic Daily reported today, citing Dong Ximiao, vice president
of Chongyang Institute for Financial Studies at Renmin University of China.
Market rates have already fallen and cutting rates is "too rushed" and may send
the wrong signals to the market, the daily reported citing Dong.
     China's NPL at the end of 2018 gained by 0.15 percentage point, or CNY29
million,  to 1.89%, or CNY2 trillion, from 2017, the China Business News said
citing the China Banking and Insurance Regulatory Commission. Only 10 Chinese
provinces, including Zhejiang, Guangdong, Jiangsu and Guizhou, registered lower
NPLs last year, the newspaper said.
--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$$$]