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Free AccessMNI China Daily Summary: Monday, October 24
EXCLUSIVE: The People’s Bank of China (PBOC) would have to act if an overshoot in the yuan threatened financial stability or stoked inflation, with currency intervention one of many options in the bank’s toolkit, said former senior State Administration of Foreign Exchange official Guan Tao.
DATA: China's economy grew 3.9% y/y in Q3, rebounding from 0.4% in Q2 and beating the median forecast of 3.3%, data released by the National Bureau of Statistics showed. Industrial production rose 6.3% y/y in September from August's 4.2%, beating the consensus forecast for a 4.8% rise. Retail sales halved to 2.5% in September from August's 5.4% y/y, missing the forecast 3.2% gain. Fixed-asset investment edged up slightly to 5.9% y/y in Q3 compared to the 5.8% gain in the Jan-Aug period. This underperformed the median forecast for a 6.0% rise.
DATA: China's exports slowed to a 5.7% y/y pace in September from 7.1% y/y in August, helping deliver a 12.5% y/y increase in exports during the first nine months of the year, China Customs data showed. Imports rose 0.3% in September, the same pace as August, reflecting a high base effect, lower commodity prices and constrained shipping markets.
LIQUIDITY: The PBOC injected CNY10 billion via 7-day reverse repos with the rates unchanged at 2.00%. The operation led to a net injection of CNY8 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 1.7077% from 1.6726% on Friday, Wind Information showed. The overnight repo average increased to 1.4148% from the previous 1.2376%.
YUAN: The currency weakened to 7.2610 against the dollar from 7.2494 on Friday. The PBOC set the dollar-yuan central parity rate higher at 7.1230, compared with 7.1186 set on Friday.
BONDS: The yield on 10-year China Government Bond was last at 2.7175%, down from Friday's close of 2.7325%, according to Wind Information.
STOCKS: The Shanghai Composite Index fell 2.02% to 2,977.56, while the CSI300 index lost 2.93% to 3,633.37. The Hang Seng Index tumbled 6.36% to 15,180.69.
FROM THE PRESS: The 20th National Congress of the Communist Party of China delivered Xi Jinping a third term as head of the Party and the military and a new batch of both young and experienced cadres were appointed to the Central Committee, the Party-run People’s Daily said in an editorial on Monday. The Party must have a strong and collective leadership to create new great achievements under the complex and severe uncertainties at home and abroad, the newspaper said. It is necessary to improve political judgment and safeguard the authority of the Party with Xi at its core, and unify thoughts and actions into the major decisions and arrangements made at the Congress, forming a strong synergy to realise the Chinese dream together, the newspaper said.
The 20th National Congress of China’s ruling Communist Party elected a new 205-person Central Committee made up of officials from the State Council, National People’s Congress, military, armed police force, and party secretaries from 31 provinces, Caixin reported. It includes 167 people born in the 1960s and 38 people born in the 1950s, the first time those born in the 1960s have been the majority, said Caixin. This compares to the 19th Central Committee where the proportion of those born in the 50s and 60s was 80% and 20%. The youngest members include Yin Yong, deputy party secretary of Beijing city, Zhao Gang, deputy party secretary of Shanxi province and Zhao Long, governor of Fujian province, said Caixin.
China should continue to speed up the use of infrastructure-back local government special bonds and quicken construction work before the weather turns cold, the Securities Daily reported citing analysts. The use of special bonds should also be expanded to fund a wider range of projects and next year’s special bond quota should be front-loaded to provide support for steady growth early next year, analysts were cited as saying. Infrastructure investment is expected to grow about 10% y/y this year, playing a driving role in stabilising economic growth, with a total CNY3.69 trillion of special bonds being issued as of October 23, the newspaper said.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.