MNI China Daily Summary: Monday, September 17

     LIQUIDITY: The People's Bank of China injected CNY265 billion via 1-year

medium-term lending facility (MLF) loans on Monday. Rates were kept unchanged at

3.30%. The CFETS-ICAP money-market sentiment index closed at 35 on Friday, down

from 36 on Thursday.

     YUAN: The yuan depreciated to 6.8705 per dollar from Friday's close of

6.8521. The PBOC set the yuan central parity rate at 6.8509, weaker than

Friday's 6.8362.

     MONEY MARKET RATES: The benchmark seven-day deposit repo average increased

to 2.6209% from 2.6184% on Friday, while the overnight average fell to 2.4492%

from 2.4767%: Wind Information.

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

3.6400%, down from Friday's close of 3.6450%, according to Wind Information.

     STOCKS: The Shanghai Composite Index closed 1.11% lower at 2,651.79. Hong

Kong's Hang Seng Index fell 1.28% to 26,936.42.

     FROM THE PRESS: The People's Bank of China (PBOC) may increase liquidity

injections this week to meet higher demand amid the monthly tax payment deadline

and larger government bond issuances, the China Securities Journal reported.

Issuances scheduled this week could total CNY470 billion, the most in two years.

An increase in maturing reverse repo purchases and higher demand for cash ahead

of the Mid-Autumn Festival weekend, also warrant greater liquidity provision,

the Journal said.

     Beijing's decision to allow qualified foreigners to trade directly on its

mainland stock exchanges should boost confidence in China's financial market,

the Securities Daily reported, citing Fu Lichun, research director of Northeast

Securities. Starting Sept. 15, foreigners residing in China, as well as overseas

employees of A-share companies participating in stock incentive programmes, can

directly trade in the A-share market, the Daily said, citing a regulatory

document. The programme isn't expected to attract large capital inflows, given

the limited number of eligible individuals, the Daily noted.

     Beijing is expected to accelerate measures to reduce tax burdens, make

monetary instruments more market-based, limit state ownership to public welfare

industries, and promote greater foreign participation in China's financial

markets, the Economic Information Daily reported, citing officials including

Yang Weimin, former deputy head of the Office of the Central Commission for

Financial and Economic Affairs. China will prioritise structural reforms over

quantitative growth, the newspaper said, citing participants at last week's

China Development Forum.

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]