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KOREA RATES

Futures Give Back Monday's Gains

CHINA RATES

China Repo Rates Rise on Tuesday

     TOP NEWS: China on Monday cut money market policy rates by 10 basis points,
according to data on the website of the People's Bank of China (PBOC). The 7-day
and 14-day reverse repo rates were set to 2.40% and 2.55% from the previous
2.50% and 2.65%, according to PBOC data. The PBOC will closely monitor liquidity
conditions during the virus outbreak, the central bank said in the statement.
     POLICY: The PBOC will take measures to provide ample and cheap capital when
financial markets open on Feb. 3, including the provision of CNY300 billion of
low-cost refinancing funds to major nationwide and local banks affected by the
coronavirus outbreak, Deputy Governor Pan Gongsheng said in an interview with
the bank's newspaper Financial News on Saturday.
     POLICY: The PBOC is expected to lower the rate for Medium-term Lending
Facility (MLF) in February and effectively guide the Loan Prime Rate (LPR)
lower, Ma Jun, a member of the PBOC Monetary Policy Committee, told the
Financial News. The money market rate cuts this morning stabilized investors'
expectations and boosted market confidence, according to the newspaper.
     POLICY: China is capable of managing the impact of the epidemic on China's
economy, likely to be temporary, as it ramps up measures to achieve the target
of building a well-off society, said Lian Weiliang, deputy director of National
Development and Reform Commission, at a press conference in Beijing today. 
     DATA: The Caixin China manufacturing Purchasing Managers' Index (PMI) edged
down 0.4 to 51.5 in January from December. The index stayed in the expansionary
zone above the breakeven 50 but is at the lowest point in five months, said
Caixin. The new orders sub-index continued to fall for the third consecutive
month, but remained above 50. While the new export orders sub-index fell below
50 due to weak overseas demand, according to Caixin.
     DATA: Combined profits made by China's largest industrial companies in
December fell 6.3% y/y, reversing the 5.4% gain in November, data released by
the National Bureau of Statistics (NBS) showed. The total in 2019 declined 3.3%
y/y due to weak demand, falling prices and rising costs, the NBS said. Profit
losses in steel, chemical, automotive and petroleum processing industries
dragged down the overall growth by 7.4 percentage points, according to the NBS.
     LIQUIDITY: The PBOC net-injected CNY150 billion into the interbank markets
on Monday, according MNI calculations. The operations were in the form of CNY300
billion 14-day and CNY900 billion 7-day reverse repo purchases against CNY1.05
trillion maturing, aiming to maintain "reasonable and ample liquidity", PBOC
said.
     RATES: The 7-day weighted-average interbank repo rate for depository
institutions (DR007) increased to 2.6003% from the close of 2.5378% in Jan. 23,
the last working day before the Chinese New Year holiday, Wind Information
showed. The overnight repo average rose to 2.4892% from the previous 2.3714%.
     YUAN: The currency fell to 7.0257 against the U.S. dollar from the close of
6.9300 on Jan. 23, the largest daily lost since Aug. 5. The dollar-yuan central
parity rate was raised to 6.9249, highest since Jan. 13 and was the biggest
daily move since Aug. 6.
     BONDS: The yield on 10-year China Government Bond was last at 2.8375%, down
from the close of 3.0050% on Jan. 23, according to Wind Information. 
     STOCKS: The Shanghai Composite Index plunged 7.72% on its first day of
trading after the Chinese New Year holiday to 2,746.61, the biggest one-day loss
in more than four years, on growing concerns that the coronavirus outbreak will
sap growth. The Hang Seng Index in the Hong Kong market, which opened Jan. 29,
rose 0.17% to 26,356.98. 
     FROM THE PRESS: China Securities Regulatory Commission (CSRC) ordered some
brokerages to suspend margin selling starting today, according to International
Finance News. The CSRC also required brokers not to close out positions on
companies in areas impacted by the coronavirus epidemic, the newspaper said
citing anonymous sources at securities companies.
     Attacks by U.S. politicians on China over the coronavirus are disgraceful,
the Global Times said in an editorial on Monday. The newspaper criticized
Commerce Secretary Wilbur Ross for saying that the epidemic would help bring
jobs back to the U.S. China has taken extraordinary measures that will help
recover from the crisis soon, 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$$$]