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TOP NEWS: The yuan's status in the world continues to rise and China's
financial markets continue to open up, People's Daily, a government mouthpiece,
said Monday in a front-page commentary. China has reduced foreign-exchange risks
and made trade and investment more convenient through bilateral currency swaps,
the Renminbi Qualified Foreign Institutional Investor (RQFII) program, outright
monetary transactions, renminbi clearing banks and the Cross-Border Interbank
Payment System. China will stick to further opening up markets, improving the
pricing process for the yuan exchange rate and reducing controls on capital
flow, the newspaper said. "This creates a good financial environment for China's
economic growth," said Zhu Juan, director general of the international
department at the People's Bank of China. (People's Daily)
TOP NEWS: The People's Bank of China announced on its website Monday
morning that it had injected CNY70 billion in liquidity via seven-day reverse
repos, CNY20 billion via 14-day reverse repos and CNY10 billion via 63-day
reverse repos, with rates unchanged at 2.45%, 2.60% and 2.90%, respectively. The
PBOC did not give further explanations about its operations this morning. This
resulted in a net injection of CNY20 billion for the day, as a total of CNY80
billion in reverse repos matured on Monday.
POLICY: China's property sales are expected to decline as much as 5% next
year due to the high base this year and a possible slowing of sales in
lower-tiered cities, S&P Global Ratings said Monday. In a webcast gauging the
outlook of the Chinese property sector, the ratings agency said the projected
drop of sales growth could be attributed to the robust sales this year pushing
the base to a high level. S&P said that national property sales rose 10% from
January to October, which was above expectations, but that they fell markedly in
October, with a year-over-year decline of 3.4%, signaling a slowing trend.
RATES: Money market rates were higher. The seven-day repo average was last
at 2.8834%, compared with Friday's average of 2.8805%. The overnight repo
average was at 2.7976%, compared with Friday's 2.7149%.
YUAN: The yuan fell against the U.S. dollar even though the People's Bank
of China set the fixing rate stronger for the day. The yuan was last at 6.6368
against the U.S. unit after opening at 6.6330, compared with the official
closing price of 6.6353 on Friday. The PBOC set the yuan central parity rate at
6.6271, stronger than Friday's 6.6277. The PBOC has set the fixing stronger for
two straight trading days.
BONDS: The yield on benchmark 10-year China government bonds was last at
3.9600%, compared with the previous close of 3.9400%.
STOCKS: Stocks were up, led higher by the computer and property management
sectors. The benchmark Shanghai Composite Index closed up 0.28% at 3,392.40.
Hong Kong's Hang Seng Index was 0.12% higher at 29,234.02.
FROM THE PRESS: China's economic growth is expected to surpass 6.5% in
2018, said Fan Hengshan, deputy secretary-general of the National Development
and Reform Commission, the Shanghai Securities Journal reported Monday. This
year's economic growth, whether in terms of efficiency or structure, is better
than last year and has exceeded expectations, Fan said on Saturday during a
forum in Beijing. If this year's economic growth is more than 6.8% or 6.9%, next
year's gross domestic product growth will be no lower than 6.5%, he argued. He
also said that as China works to transform its growth engine, focusing on
efficiency and structure, its economy will improve in quality and fairness.
(Shanghai Securities Journal)
China should allow local-government financing vehicles (LGFVs) and
state-owned enterprises controlled by local governments to default under market
forces, which could correctly judge the credit risks of local-government debt,
Ma Jun, former chief economist of the People's Bank of China, told the Shanghai
Securities Journal. Ma, now director of the Tsinghua University Finance and
Development Research Institute, stressed that the process needs to have as its
primary goal the prevention of a systemic financial crisis. The establishment of
property taxes nationwide should be accelerated as a source of income for local
governments, he argued, which would weaken the desire to increase liabilities
and sell land for more income to fund projects. Supervision by local People's
Congresses should be strengthened, with enforced debt quotas and transparency on
balance sheets, Ma said. (Shanghai Securities Journal)
The State Council has confirmed a plan for a pilot program this year to
transfer 10% of the shares of some state-owned-enterprises (SOEs) to basic
pension funds, the Economic Information Daily, a newspaper under the official
Xinhua News Agency, reported Monday. The plan, announced Saturday, is to use the
money from the shares to fund pensions for SOE workers. The transfers would not
involve listed SOEs and would not create a process to turn SOE shares into cash,
the newspaper said, citing an unidentified Ministry of Finance official. The
plan calls for increasing the pace of the transfers in 2018 and the following
years. (Economic Information Daily)
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