MNI China Daily Summary: Monday, November 13

     TOP NEWS: China should not pursue an excessively high economic growth rate

in 2018, but rather set a target of about 6.5% GDP growth, Zhu Baoliang, chief

economist for the State information Center, an agency run by the State Council,

said in an interview published Monday by the Financial News, a journal run by

the People's Bank of China. In addition, Zhu said, the consumer price index

should be controlled within a level of growth of 3%, while growth in the M2

money supply should be maintained at around 10% in 2018. He also said growth in

total social financing should be around 12%. Zhu added that infrastructural and

property investment are expected to fall over the coming year while the

manufacturing sector is not expected to see a big rise. (Financial News)

     LIQUIDITY: The People's Bank of China injected CNY80 billion in seven-day

reverse repos, CNY70 billion in 14-day reverse repos and CNY30 billion in 63-day

reverse repos via open-market operations. This resulted in a net injection of

CNY150 billion for the day, as a total of CNY30 billion in reverse repos matured

on Monday. A total of CNY66.5 billion in Medium-term Lending Facility (MLF)

loans also matured on Monday. Taking account of maturing MLF loans, the PBOC

injected a net of CNY83.5 billion into the banking system on Monday. A total of

CNY340 billion in reverse repos will mature this week. An additional CNY122.5

billion in MLF loans will mature Thursday, while CNY80 billion in treasury

deposits will mature Friday.

     RATES: Money market rates were mixed. The seven-day repo average was last

at 2.9335%, lower than Friday's average of 2.9438%. The overnight repo average

was at 2.8155%, higher than Friday's 2.7379%.

     YUAN: China's weekly Renminbi Index versus 24 trade-weighted currencies was

published Monday by the China Foreign Exchange Trading System -- the central

bank unit that runs the country's interbank market. The index was down 0.3% to

95.05 last week after a 0.34% rise the previous week. As of Nov. 10, the yuan

had appreciated 0.23% against the 24-currency basket since Dec. 30, according to

MNI calculations.

     YUAN: The yuan fell against the U.S. dollar after the People's Bank of

China set a weaker daily fixing. The yuan was last at 6.6446 against the U.S.

unit, compared with the official closing price of 6.6400 on Friday. The PBOC set

the yuan central parity rate against the U.S. dollar at 6.6347 on Monday, weaker

than Friday's 6.6282.

     BONDS: The yield on benchmark 10-year China government bonds was last at

3.9800%, up from the previous close of 3.9200%, according to Wind, a financial

data provider.

     STOCKS: Stocks moved higher, led up by the steel sector. The benchmark

Shanghai Composite Index closed up 0.44% at 3,447.84. Hong Kong's Hang Seng

Index was 0.35% higher at 29,222.03.

     FROM THE PRESS: Banks' entrusted investment businesses are expected to

rebound in the period ahead as the correction in the bond market approaches an

end, the Financial News, a journal run by the People's Bank of China, reported

Monday. Since September, bond entrusted investment funds have seen healthy

growth compared with the sluggish performance in previous months this year,

particularly the public offerings of funds backed by banks, the report said. The

increase is partially due to some funds trying to expand business at the end of

year. In the past year, banks cut back their entrusted investment businesses

under pressure from stricter regulation and a weak bond market, the report

noted, adding that some small- and medium-sized banks even suspended their

entrusted investment businesses. (Financial News)

     China needs to prevent potential risks from financial technology

innovations (fintech) given uncertainties about the impact on liquidity, credit

and financial system operations, the Financial News, a journal run by the

People's Bank of China, said in a commentary Monday. Advantages from new

developments in data and technology are causing banks, securities firms and

insurance companies to merge fintech into traditional transaction activities at

a rapid pace, the commentary said. But potential risks have been accumulating

and could spill over to the financial system as a whole, the commentary warned.

There are challenges ahead in optimizing the construction of fintech

infrastructure, improving regulation, building up a relevant legal system as

well as protecting consumer's rights and interests, the commentary said.

(Financial News)

     Investors need to be cautious about a potential price drop of convertible

bonds, as their issuance has been expanding at a rapid pace, the Securities

Daily reported Monday. Given issuers have rights to reduce prices when bonds are

converted into stock, investors could have great difficulty selling stocks at a

profit, the report said, citing people with knowledge of the situation.

Investors should be concerned about a price fall in these bonds, particularly

those with ratings that have been withdrawn, the report warned. (Securities

Daily)

     China e-commerce platforms set a new sales record during Sunday's Single's

Day online shopping festival, the Shanghai Securities News reported Monday.

Alibaba Group took in a total CNY168.2 billion via its online e-commerce

platform, Tianmao.com, within the 24 hours, compared with the previous record of

CNY120.7 billion last year, with the value of sales exceeded CNY10 billion three

minutes after the midnight start of the world's largest sales event. Meanwhile,

fellow on-line shopping giant JD.com took in CNY127.1 billion, a 50% increase

compared with Single's Day in 2016, the report said. Updated consumption

capacity and strong consumer sentiment have opened a new era for retail

e-commerce, the report noted. (Shanghai Securities News)

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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