MNI China Daily Summary: Monday, October 28

     POLICY: The People's Bank of China (PBOC) may become the first central bank

to launch a digital sovereign currency, dubbed DC/EP (Digital

Currency/Electronic Payments), said Huang Qifan at a summit in Shanghai today, a

vice chairman of China Center for International Economic Exchanges, who didn't

give a timetable.

     POLICY: China will further liberalize its forex market, encourage regional

trials of forex management reform to increase market participants and forex

products, but a precondition is risk prevention, said Lu Lei, a deputy

administrator of State Administration of Foreign Exchange at a conference in

Shanghai on Sunday. 

     DATA: The combined profits made by China's largest industrial companies in

September fell 5.3% y/y, steeper than 2% drop in August, due to the declining

ex-factory prices of industrial products and slowing sales, according to a

statement by the National Bureau of Statistics (NBS) released on Sunday. That

would be the sharpest drop since 8.8% reduction in August 2015, according to NBS

data.

     LIQUIDITY: The PBOC skipped open market operations, with CNY10 billion net

liquidity added after cash management measures and maturing reverse repos. The

Treasury deposited CNY60 billion into commercial banks, which offset the

maturity of reverse repos, leaving reasonable and ample level of liquidity, PBOC

said. CNY50 billion reverse repos are maturing today, according to Wind

Information.

     RATES: The seven-day weighted average interbank repo rate for depository

institutions (DR007), traded between 2.3500% and 3.0000%, increased to 2.6745%

from Friday's close of 2.6613%, Wind Information showed. The overnight repo

average, being traded between 2.0000% and 2.6700%, fell to 2.4709% from Friday's

2.5012%.

     YUAN: The yuan strengthened to 7.0615 against the U.S. dollar from Friday's

close of 7.0716. The PBOC set the dollar-yuan central parity rate weaker at

7.0762, compared with previous 7.0749.

     BONDS: The yield on 10-year China Government Bond was last at 3.2900%, up

from Friday's close of 3.2325%, according to Wind Information. 

     STOCKS: Chinese market bounced as China and the U.S. appeared close to

finalizing a preliminary deal, with the Shanghai Composite Index gained 0.85% to

2,980.05. Hong Kong's Hang Seng Index edged up 0.84% to 26,891.26.

     FROM THE PRESS: The PBOC may conduct targeted medium-term lending

facilities (TMLF) later in this quarter to boost funding for private and small

companies, though not in the immediate term after injecting CNY590 billion last

week, the Securities Daily reported citing Wang Qing, chief macroeconomic

analyst at credit rating agency Dongfang Jincheng.

     China's ruling Communist Party will hold its fourth plenary session of the

19th Central Committee on Oct 28-31 in Beijing, the Economic Information Daily

reported. The meeting will focus on improving the socialist system with Chinese

characteristics and promoting the national governance capacity, the newspaper

said.

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

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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