MNI China Daily Summary: Monday, November 5

     TOP NEWS: In the next 15 years, China will purchase goods worth more than

$30 trillion and services exceeding $10 trillion, Chinese President Xi Jinping

said Monday in his keynote speech during the opening ceremony of the country's

first International Import Expo. Xi also pledged to continue the relaxation of

market access for foreign investors, especially into domestic areas like

education and medical care, and further simplified the negative list, or list of

industries barred from foreign investment. He also pledged to further cut both

tariffs and costs of imports, improve the efficiency of customs clearance, and

boost the development of cross-border E-commerce.

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

(OMOs) on Monday, while conducting CNY403.5 billion in medium-term lending

facilities (MLFs). That left liquidity unchanged, as maturing MLFs balanced out,

according to Wind Information. The 7-day weighted average interbank repo average

rate for depository institutions (DR007) increased to 2.6206% from Friday's

close of 2.6020%, Wind Information showed. The overnight repo average decreased

to 2.4141% from Friday's 2.4627%.

     YUAN: The yuan depreciated to 6.9260 against the U.S. dollar from Friday's

close of 6.8897. The PBOC set the yuan central parity rate stronger for a second

day, up 395 pps from Friday to 6.8976. Today's gain is the biggest since Aug 28.

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

3.5275%, below Friday's closing price of 3.5525%, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index closed 0.41% lower at

2,665.43. Hong Kong's Hang Seng Index decreased 2.08% to 25,934.39.

     DATA: Caixin's China services PMI, which gauges the activities of China's

smaller service companies, fell from 53.1 in Sept to 50.8 in Oct, the lowest in

13 months, said Caixin, which independently publishes the data. The new orders

sub-index stalled for the first time in almost 10 years at around 50, halfway

between contraction and expansion, Caixin said. Many companies noted shrinking

demand, with confidence over the future at a three-month low, Caixin said

without giving details. The slowing trend is consistent with the official

service PMI released last week, which fell to 53.9 from 54.9 in Sept.

     FROM THE PRESS: China's saving rate reached almost 50% at its peak, but it

has declined by a few percentage points and is likely to drop further quickly,

said Zhou Xiaochuan, the former governor of the People's Bank of China in a

recent forum, Caixin reported, pointing out that the savings rate is linked to

the global capital flows. Though the decline in the savings rate indicates

growing domestic demand, the accelerating decline also require close attention,

according to Zhou. With the development of fin-tech, consumption loans are

developing vest fast, some of which induces the young generation to borrow and

consume in advance, this could bring an important impact, the newspaper said

citing Zhou. (Link to the story: https://bit.ly/2PKTShe)

     Recent high yuan volatility was mainly due to changes in the external

environment and market sentiment, and investors should view the currency from a

long-term perspective and be comfortable with such moves, the Economic Daily

said in a commentary piece on Monday. With the steady advancement of the

exchange rate reform, the yuan has become more flexible, and China has abundant

tools to deal with excessive volatility and take targeted measures to keep the

rate basically stable at a reasonable and balanced level, the Daily said. (Link

to story: https://bit.ly/2JJLJ7j)

     The government of Shanghai injected CNY30 billion to alleviate the

financing difficulty of private businesses, Shanghai Securities News reported on

Monday. Shanghai will set up a CNY10-billion fund to rescue qualifying private

companies, the newspaper said. It will also urge banks to lend to small

companies and provide CNY10 billion of credit and guarantee loans to over 1000

firms. The scale of the financing guarantee funds for small companies will be

expanded and gradually cover large and medium private companies, the newspaper

said. (Link to story: https://bit.ly/2QjIxBw)

     Shenzhen's housing market has slowed markedly and developers are offering

discounts and second-hand homeowners are cutting prices, 21st Century Business

Herald reported on Saturday. The price of existing homes in transactions

decreased for the third month, down 0.73% m/m to CNY52,481 per square meter in

October, the newspaper said citing data of Shenzhen Centaline Property. (Link to

story: https://bit.ly/2QjUS93)

     China's first International Import Expo starting on Monday is for China to

promote a new round of opening up, the People's Daily overseas edition said,

citing President Xi Jinping. As a global resource-allocating platform, the event

can help transforming "Made in China" to "Innovated in China", seeking speed of

development to quality, thus becoming a manufacturing power, the newspaper said.

(Link to story: https://bit.ly/2JJHqsF)

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

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

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