MNI China Daily Summary: Monday, January 28

     TOP NEWS: The People's Bank of China (PBOC) has allowed credit rating

agency Standard & Poor's to conduct rating services in China and set up a

wholly-owned subsidiary in Beijing, according to a statement on the PBOC

website. The PBOC said it will support more internationally influential and

qualified credit rating agencies entering the Chinese market.

     DATA: December industrial profits fell 1.9% y/y, extending the 1.8% decline

in November for a second month, data by the National Bureau of Statistics today

showed. Accumulated profits for 2018 rose by 10.3% y/y, down from 11.8% y/y in

Jan-Nov, and compared to 2017's 21.0%. Profits in the automotive industry fell

4.7% y/y in 2018, while the computer, communications and other electronics

manufacturing fell 3.1%.

     LIQUIDITY: The PBOC skipped open market operations (OMOs) for a sixth day,

leaving liquidity unchanged given no reverse repos maturing today, according to

Wind. The central bank said the total liquidity in the banking system is at a

relatively high level, enough for cash input, government bond issuance and other

factors.

     RATE: The 7-day weighted average interbank repo rate for depository

institutions (DR007) decreased to 2.4437% from Friday's close of 2.5726%, Wind

data showed. The overnight repo average decreased to 2.1753% from Friday's

2.3518%.

     Yuan: The yuan appreciated to 6.7389 against the U.S. dollar from Friday's

close of 6.7640. The PBOC set the yuan's central parity rate against the dollar

at 6.7474, compared with the 6.7941 set last Friday, registering the biggest

gain since Dec 4, 2018.

     STOCKS: The benchmark Shanghai Composite Index fell 0.18% to 2,596.98. Hong

Kong's Hang Seng Index rose 0.03% to 27,576.96.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.1525%, down from the closing of 3.1600% on Friday, according to Wind

Information.

     FROM THE PRESS: China's capital market participants expect the new chairman

of China Securities Regulatory Commission Yi Huiman to prioritize the launch of

a sci-tech innovation board on the Shanghai Stock Exchange, the Securities Daily

reported today.

     China should strive to stabilize employment and wages, as they are the keys

to boosting domestic demand and beating a slowdown, The Paper reported Sunday,

citing Zhang Liqun, researcher at the Macroeconomic Research Department of the

Development Research Center of the State Council. The government should actively

increase infrastructure investment, such as improving public services, Zhang

said according to the newspaper. Improvement living standard creates more

investment activities, The Paper reported.

     China's shadow banking is expected to contract at a slower pace this year

than last, as the authorities will adopt "counter-cycle adjustment" and relax

restrictions on some off-balance sheet businesses and entrusted loans, China

Securities Journal reported today citing analysts including Huang Yiping at

Peking University. Shadow banking has contracted too quickly and it's weighing

on the real economy, so the most urgent task is to stabilize leverage and slowly

develop the shadow banking sector, the newspaper said citing Lian Ping, chief

economist at Bank of Communications.

--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

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