MNI China Daily Summary: Monday, November 12

     TOP NEWS: Depreciation pressure on the yuan may ease if the Fed slows its

rate hikes, a member of the People's Bank of China's monetary policy committee

told MNI in an exclusive interview, in which he also said Chinese authorities

have switched to stabilising the economy's leverage levels, rather than pursuing

a rapid decrease in debt ratios. Ma Jun, who was the PBOC's chief economist

until last year and is a professor at Tsinghua university, said some market

participants are expecting the Federal Reserve to become less hawkish for fear

of harming highly-leveraged sectors of the economy, and as the stock market

suffers. "If the Fed slows its pace, the dollar index may weaken and other

currencies would rebound," Ma said, adding that this could ease pressure on the

yuan.

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations

(OMOs) Monday, leaving liquidity unchanged, as no reverse repos matured,

according to Wind Information. The central bank said liquidity in the banking

system is at a reasonable and ample level.

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

institutions (DR007) increased to 2.6048% from Friday's close of 2.5532%, Wind

Information showed. The overnight repo average increased to 2.3037% from

Friday's 2.0345%.

     YUAN: The yuan closed at 6.9666 against the U.S. dollar from Friday's close

of 6.9440. The PBOC set the yuan central parity rate at 6.9476 on Monday,

compared with last Friday's 6.9329.

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

3.4850%, up from the closing price of 3.4700% on Friday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 1.22% higher at

2,630.52. Hong Kong's Hang Seng Index increased 0.12% to 25,633.18.

     FROM THE PRESS: China's new bank lending requirement to boost loans to

private companies to account for no less than 50% of new corporate loans is for

the entire industry, not an assessment target for each bank, the Securities

Daily said Monday, citing an anonymous banking regulator. Guo Shuqing, chairman

of the China Banking and Insurance Regulatory Commission first said last

Thursday that policymakers are considering setting lending goals for banks. It

will be unrealistic to set the same lending target for every bank, as each has

different positions and clients. No specific targets will be proposed for

individual banks, nor will they be ordered to meet targets, the newspaper said

citing the regulator. (Link to the story: https://bit.ly/2PkPrtU)

     China's central bank may not follow a Fed interest rate hike in December,

but continue to keep liquidity at a "reasonable and ample" level via reserve

requirement ratio cuts, reverse repos and the medium-term lending facility, said

Securities Daily Monday, citing Wang Qing, chief macroeconomic analyst at credit

rating agency Dongfang Jincheng. The central bank's latest monetary policy

report shows that current liquidity is still failing to flow into the real

economy, Wang said. Before the tight credit condition eases, money market rates

are unlikely to turn higher, the Daily said, citing Wang. Policymakers will

continue to guide funds to serve private and small companies via expanding

credit limits, lowering loan interest rates, providing guarantees and

rediscounting, the report said. (Link to the story: https://bit.ly/2zK65s9)

     China's policy planners should actively promote investment projects to

private investors, so as to consolidate the current good growth momentum seen

across private investment, the China News Services said Saturday, citing Ning

Jizhe, deputy director of the National Development and Reform Commission(NDRC),

who pledged to remove obstacles for private companies. The NDRC has presented a

batch of projects in line with the national industrial policy with investment

return on private capital, mainly in the areas of transportation and energy,

environmental protection, Ning said. China's private investment continued to

pick up this year, with a growth rate of more than 8%, accounting for about 60%

of the total investment, the newspaper said. (Link to the story:

https://bit.ly/2QFH497)

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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