Free Trial

MNI China Daily Summary: Monday, October 26

(MNI) LONDON

POLICY: China must increase its ability to manage risks as it opens up its economy and strictly adheres to the three principles of safety, liquidity, and profitability, Vice President Wang Qishan said. Regulators must crack down on excessive speculation, prevent cycles of financial bubbles and fraud, Wang said on Saturday at the 2020 Bund Summit co-hosted by China Finance 40 Forum.

POLICY: Chinese regulators will be more proactive in facilitating the yuan's global use given increasingly complex domestic and external environments, even as it the market plays a major role in the process, said Zhu Jun, the director of the international department of the People's Bank of China (PBOC).

POLICY: China plans to allow the deferment of debt repayments by some countries hit by the Covid-19 outbreak on a case-specific basis, Zhou Xiaochuan, former governor of the PBOC, told the 2020 Bund Summit in Shanghai. Such relief programs may "not necessarily" imply the major restructuring, reduction or cancellation of the obligations after the pandemic, Zhou stressed.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY50 billion via 7-day reverse repos with the rate unchanged and also deposited CNY50 billion at commercial banks. This resulted in a net injection of CNY50 billion as CNY50 billion of reverse repos matured, 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) increased to 2.2548% from last Friday's close of 2.2170%, Wind Information showed. The overnight repo average rose to 2.2157% from the previous 2.1468%.

YUAN: The currency weakened to 6.6985 against the dollar from 6.6690 on last Friday. The PBOC set the dollar-yuan central parity rate higher for a second trading day at 6.6725, compared with the 6.6703 set on Friday.

BONDS: The yield on 10-year China Government Bond was last at 3.1890%, down from the close of 3.1925% on Friday, according to Wind Information.

STOCKS: The Shanghai Composite Index lost 0.82% to 3,251.12, while the CSI300 index decreased 0.58% to 4,691.24. Hang Seng Index rallied 0.54% to 24,918.78.

FROM THE PRESS: The market should be prepared for the yuan to swing both ways and should avoid following the "herd" in chasing new highs after the recent spike, the Economic Information Daily said in a commentary on Monday. The yuan has appreciated by more than 2% this month, and exporters' profits will decline if they haven't hedged against exchange rate risks, the newspaper said. While the resilience and potential of the Chinese economy will provide fundamental support for exchange rate stability, the simple "buy low and sell high" principle would help prevent excessive corrections later, the Daily said.

China should slow the opening of capital accounts given external uncertainties, weak growth momentum and rising systemic risks in the domestic markets, Sina Finance reported citing Zhang Ming, researcher at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. There is no so-called "new cycle of yuan appreciation" given capital controls are lenient on the entry and strict on exit, as well as the countercyclical regulations which apply, Zhang said.

Foreign investment in China is likely to continue increasing this year as China's economic recovery beats the the global curve, the Shanghai Securities News reported citing Zong Changqing, head of foreign investment at the Ministry of Commerce. The ministry will facilitate the increase with more preferential policies and expand pilot programs which are opening up the service industry, the newspaper said. Non-financial foreign investment in China grew 25.1% y/y in September, a record high this year, with the accumulated growth for the first three quarters turning positive in both dollar and yuan terms, the News said.

MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
True
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
True

To read the full story

Close

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.