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LIQUIDITY: The People's Bank of China (PBOC) injected CNY5 billion via 7-day reverse repos with the rates unchanged at 2.00%. The operation led to a net injection of CNY3 billion after offsetting the maturity of CNY2 billion reverse repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.8403% from 1.8220% on Friday, Wind Information showed. The overnight repo average decreased to 1.6544% from the previous 1.6956%.
YUAN: The currency strengthened to 7.0378 against the dollar from 7.1106 on Friday. The PBOC set the dollar-yuan central parity rate lower at 7.0899, compared with 7.1907 set on Friday, marking the biggest daily rise (1.40%) since FX reform in 2005.
BONDS: The yield on 10-year China Government Bond was last at 2.8350%, up from Friday's close of 2.7375%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged down 0.13% to 3,083.40, while the CSI300 index gained 0.15% to 3,794.02. The Hang Seng Index rallied 1.70% to 17,619.71.
FROM THE PRESS: China’s industrial production and consumption growth may slow in October amid Covid outbreaks and controls, though investment in infrastructure and manufacturing may remain high to offset declining real estate investment, Yicai.com reported citing analysts. China is set to release its key October indicators on Tuesday. Industrial output may decelerate to 4.5% y/y from September’s 6.3%, as operating rates declined on weaker domestic and external demands, said Yicai citing Wen Bin, Chief Economist of Minsheng Bank. Retail sales could fall to zero percent y/y from the previous 2.5% as car sales underperformed in peak season, while wider Covid outbreaks pressured optional spending areas like catering, the newspaper said citing analysts from China International Capital Corporation.
China’s central bank and top banking regulator have co-released 16 measures to increase financial support for the property market, with analysts saying “the most supportive policy” provides reassurance, Yicai.com reported. New measures include exempting banks and their managers from responsibility should new lending aimed at ensuring the delivery of homes turn into bad loans, while asset management products like trusts are encouraged to support real estate financing for the first time, the newspaper said. These measures will accelerate the delivery of unfinished housing projects in Q4, ease developers’ liquidity pressures, control credit risk, and curb the decline in real estate investment, the newspaper said citing analysts.
The PBOC is expected to roll over the maturing CNY1 trillion medium-term lending facility with the same amount on Tuesday, which will plug a liquidity gap amid upcoming tax payments, China Securities Journal reported citing analysts. The maturing amount of interbank certificates of deposit and the net payments of government bonds will also be significantly higher than those of the previous week, the newspaper said citing analysts. Apart from renewing MLFs, the PBOC may also increase short-term liquidity injections as a continuous tightening liquidity is not in line with the direction of monetary regulation, the newspaper said.
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