MNI China Daily Summary: Thursday, November 10

EXCLUSIVE: China’s new leadership team should provide greater clarity on the role of private enterprise and relax Covid measures to restore confidence in Chinese stocks and curb the capital outflows that recently pushed shares to multi-year lows, advisers and analysts said.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY9 billion via 7-day reverse repos with the rates unchanged at 2.00%. The operation led to a net injection of CNY2 billion after offsetting the maturity of CNY7 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 1.8861% from 1.8517% on Wednesday, Wind Information showed. The overnight repo average increased to 1.8135% from the previous 1.7969%.

YUAN: The currency weakened to 7.2474 against the dollar from 7.2380 on Wednesday. The PBOC set the dollar-yuan central parity rate higher at 7.2422, compared with 7.2189 set on Wednesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.7025%, up from Wednesday's close of 2.6925%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.39% to 3,036.13, while the CSI300 index fell 0.77% to 3,685.69. The Hang Seng Index fell 1.70% to 16,081.04.

FROM THE PRESS: The Ministry of Finance has front-loaded some of next year’s quota of local government bonds to stimulate investment, which is one month earlier than last year, Securities Daily reported citing local finance departments. Fujian province said it has been allocated CNY103.4 billion of new debt quotas in November, which will be used to support the construction of transportation infrastructure, new energy and high-tech projects. Fujian is accelerating to get projects prepared and plans to launch the bond sales as soon as possible in January, the newspaper said.

The scope and scale of debt financing support for private property developers is expected to be expanded as the financing environment shows signs of recovery, China Securities Journal reported. The PBOC has provided funds through re-lending programs to support private developers’ bond issuance with credit enhancement and credit risk mitigation certificates, which is expected to support about CNY250 billion of bond financing, the newspaper said. The total non-bank financing of developers was CNY55.68 billion in October, a rise of 16.4% y/y, the first positive growth since this year, the newspaper said citing data from China Index Academy.

Leading nucleic acid testing companies face a surge in accounts receivable as financially pressured local governments default on fees payable to testing companies after prolonged periods of testing, Caixin reported. In the first three quarters of 2022, the total accounts receivable of nine leading testing companies reached CNY36.2 billion, Caixin said. Many cities have gradually begun to reduce the frequency of testing and cancel free testing for most people, Caixin added.