MNI China Daily Summary: Monday, October 14
EXCLUSIVE: China’s aluminium consumption growth will likely slow to slightly below 5% this year from 2023's 6% gain, as appetite cooled over Q3 amid the economic slowdown, and despite robust demand from the energy and transportation sectors, local analysts have told MNI.
DATA: Growth in M2 was 6.8%, a four-month high, up from August's 6.3% growth and beating the 6.4% forecast, People's Bank of China (PBOC) data showed. Banks extended CNY1.59 trillion in new loans in September to a three-month high, up from August's CNY900 billion. Total social financing rose by CNY3.76 trillion, rising from growth of CNY3.03 trillion in August.
DATA: Exports increased 2.4% in September, slowing from last 8.7% growth and 6.0% consensus while Imports rising by 0.3% y/y, following August's 0.5% increase and missing the 0.5% forecast, according to data released by the General Administration of Customs.
POLICY: China’s trade industries face pressure in Q4 given increased restrictions and a complex external environment, Wang Lingjun, deputy director of the Customs, told a press conference.
LIQUIDITY: The PBOC conducted CNY19.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led no change to the liquidity as no repo matures today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.6141% from 1.4549%, Wind Information showed. The overnight repo average increased to 1.4113% from 1.3224%.
YUAN: The currency weakened to 7.0795 against the dollar from 7.0676 on Friday. The PBOC set the dollar-yuan central parity rate lower at 7.0723, compared with 7.0731 set on Friday. The fixing was estimated at 7.0722 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.1275%, down from the previous close of 2.1325%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index rallied 2.07% to 3,284.32 while the CSI300 index gained 1.91% to 3,961.34. The Hang Seng Index fell 0.75% to 21,092.87.
FROM THE PRESS: China is expected to issue over CNY2 trillion in government bonds to swap out local government off-balance sheet debt, Yicai.com reported, citing analysts following the Finance Ministry press conference on Saturday. The newspaper expects the standing committee of the National People's Congress will announce the exact figure later this month, and clarify if the central government would take over some existing local implicit debt. However, analysts were unclear if this year's deficit-to-GDP ratio would rise under the current government spending target, as authorities could raise additional income through other methods, the newspaper said citing analysts.
China’s CPI will rise 0.6% in October, up from September’s 0.4%, as authorities use fiscal policy to provide large scale subsidies for consumption, predicted Feng Lin, director of Research and Development at Dongfang Jincheng Securities. September’s CPI fell below the market forecast due to the rapid decline in services prices such as travel and energy. Pang Ming, chief economist at JLL Greater China, said the latest CPI data showed demand remained weak but would recover once incremental policies took effect. (Source: Securities Daily)
China needs reforms to break the cyclical relationship between local governments, local investment, financing platforms, local small and medium-sized financial institutions, and local state-owned enterprises, according to Liu Yuanchun, president of Shanghai University of Finance and Economics. Speaking at a recent seminar, Liu said non-central authorities should shift focus from economic growth to balanced economic and social development. Local SOE firms can be downsized, opened up to market forces, or consolidated with central enterprises, while some local financial institutions should merge or restructure to prevent the excessive expansion of regional authorities' power in the financial sector, Liu added.