MNI China Daily Summary: Monday, November 11
DATA: China's M2 money supply growth quickened more than expected in October, as deposits increased thanks to the robust stock market following the Government-announced pro-growth policies, People's Bank of China (PBOC) data released Monday showed. Growth in M2 was 7.5% y/y, a seven-month high, up from September's 6.8% growth and beating the 7.0% forecast. Banks extended CNY500 billion in new loans in October, down from September's CNY1.59 trillion. Total social financing rose by CNY1.4 trillion, lower than growth of CNY3.76 trillion in September.
POLICY: China’s development index for small and medium-sized enterprises reached 89.0 points in October, up 0.3 points from September and the highest level since May this year, the China Association of Small and Medium-sized Enterprises said.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY133.7 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY116.4 billion after offsetting the maturity of CNY17.3 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.7261% from 1.6104%, Wind Information showed. The overnight repo average decreased to 1.4598% from 1.4755%.
YUAN: The currency weakened to 7.1899 against the dollar from 7.1648 on Friday. The PBOC set the dollar-yuan central parity rate higher at 7.1786 on Monday, compared with 7.1433 set on Friday. The fixing was estimated at 7.1814 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.0875%, down from the previous close of 2.0975%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index gained 0.51% to 3,470.07 while the CSI300 index increased 0.66% to 4,131.13. The Hang Seng Index lost 1.45% to 20,426.93.
FROM THE PRESS: China is expected to raise its deficit-to-GDP ratio higher next year from 2024’s 3%, following the Ministry of Finance’s pledge to increase fiscal policy intensity, Securities Times reported, citing analysts. The country’s CNY10 trillion debt-swap plan will ease balance sheet pressure on local governments and financing vehicles, and increase their infrastructure investment capacity. The plan also allows local authorities to clear arrears owed to companies and boost business confidence and profitability, the newspaper said, citing analysts.
China must intensify regional multilateral and bilateral cooperation should President-elect Donald Trump implement damaging policies, Cheng Shi, chief economist at ICBC International told Yicai. Beijing can work with the EU, ASEAN and other regions to deepen development whilst promoting the Belt and Road Initiative. China needs to expand new markets and maintain supply-chain stability to cope with trade pressure from the U.S., Cheng said.
China’s CPI reached 0.3% in October, down from 0.4% previously, as the impact of extreme weather subsided and supply remained stable, according to analysts at China Merchants Macro. Vegetable and fresh fruit prices ended an upward trend, with vegetable prices returning to July levels, the analysts noted. An increase in pork supply due to high slaughter levels further weakened the year-on-year CPI support. Despite a strong consumer market during the National Day holiday in October, buyers held a cost-effective consumption pattern which limited the upward effect on prices.