MNI China Daily Summary: Thursday, Nov 11
POLICY: China foreign exchange reserves fell by 1.67% month-on-month in October, and the central bank continued to pause its purchases of gold, according to the State Administration of Foreign Exchange on Thursday.
POLICY: China's exports grew 12.7% y/y to USD309.1 billion in October, exceeding the 5.0% y/y consensus and last month's 2.4% y/y increase due to increasing orders before Christmas, according to data released by China Customs on Thursday.
POLICY: The People’s Bank of China will continue to implement supportive monetary policies, enhance communication with the market and improve financial services, said Governor Pan Gongsheng in a meeting with representatives from foreign financial institutions.
LIQUIDITY: The PBOC conducted CNY19.2 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY308.4 billion after offsetting the maturity of CNY327.6 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.6040% from 1.5525% previously, Wind Information showed. The overnight repo average decreased to 1.3273% from the previous 1.3343%.
YUAN: The currency strengthened to 7.1603 against the dollar from 7.1649 at Wednesday's close. The PBOC set the dollar-yuan central parity rate higher at 7.1659, compared with 7.0993 set on Wednesday.
BONDS: The yield on 10-year China Government Bonds was last at 2.0650%, down from Wednesday's close of 2.0777%, according to Wind Information.
STOCKS: The Shanghai Composite Index rose 2.57% to 3,470.66, while the CSI300 index was up 3.02% to 4,145.70. The Hang Seng Index increased 2.02% to 20,953.34.
FROM THE PRESS: The Chinese central bank will likely make countercyclical adjustments should the yuan weaken to about 7.3 against the dollar should U.S. President-Elect Donald Trump impose additional tariffs in 2025, said analysts from China Galaxy International Securities. The People’s Bank of China will mainly use reserve requirement ratio cuts and net purchases of government bonds to ease as yuan weakness becomes an important constraint on interest rate cuts, the analysts said. The offshore yuan fell below the 7.2 mark on Wednesday, weakening over 1,000 points during the day. (Source: Choice Data)
Private real estate developers face financing difficulties despite increased housing policy support, Yicai.com reported. The total financing amount of 65 typical real-estate companies was CNY23.19 billion in October, rising 1.9% y/y from a low base, but declining 50.4% m/m, marking the lowest monthly financing this year, data by China Real Estate Information Corp. showed. Meanwhile, developers will have about CNY100 billion of bonds maturing by year-end and about CNY700 billion in maturities in 2025, said Liu Shui, research head at China Index Academy. Despite a recent recovery in home sales, debt repayment pressure still exists as defaulted bonds await restructuring, Liu added.
China’s Highway Logistics Freight Index reached 105.1 in October, up 0.6 percentage point from September and 1.2 pp from the same period last year, according to the China Federation of Logistics and Purchasing. Gao Shuai, analyst at China Logistics Information Center, said October’s result showed an improvement in supply and demand, with activity in every province increasing apart from Shandong. Zhou Maohua, macro researcher at Everbright Bank, said the index was typically a good forward-looking indicator.