MNI China Daily Summary: Friday, January 8

POLICY: China will quicken reforms to facilitate capital outflows and will continue to facilitate cross-border financing and investment, according to Ye Haisheng, the director of Capital Account Management Department under State Administration of Foreign Exchange (SAFE), in an article published in the administration's magazine. Following the yuan breaking the key 6.5 level against the greenback and appreciated at a relatively quick pace since the beginning of this year, there are some suggestions that Ye's comments could be a signal that Beijing intends to help the acceleration of capital outflows to slow the sharp rally of the currency.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY5 billion via 7-day reverse repos with the rate unchanged on Friday. This resulted in a net injection of CNY5 billion given no maturity of reverse repos today, according to Wind Information. The operations aim to maintain the liquidity in the banking system reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.9795% from the 1.7172% on Thursday, Wind Information showed. The overnight repo average increased to 0.9169% from the previous 0.9084%.

YUAN: The currency weakened to 6.4719 against the dollar from 6.4567 on Thursday. The PBOC set the dollar-yuan central parity rate slightly higher for a second day at 6.4708. This compares with the 6.4608 set on Thursday.

BONDS: The yield on 10-year China Government Bond was last at 3.1950%, up from Thursday's 3.1750%, according to Wind Information.

STOCKS: The Shanghai Composite Index declined 0.17% to 3,570.11, while the CSI300 index dropped by 0.33% to 5,495.43. Hang Seng Index increased by 1.20% to 27,878.22.

FROM THE PRESS: Bitcoin may face increased regulatory oversight following its exponential growth and investors should not blindly chase the Bitcoin rally, the state-run Economic Daily said in an editorial. Investing in Bitcoin is risky as it may become valueless should sovereign nations declare them illegal, the newspaper said citing "experts" it did not identify. The recent surge in Bitcoin's value is due to slowing supply and surging demand for non-traditional assets, but it lacks physical backing and guarantees by legitimate entities, the editorial said.

China's GDP may have grown 6% in Q4 with the highest forecast at 7% and lowest 4.5%, the Securities Times reported citing the median of projections by 43 agencies. The strong real estate market should support the construction and real estate industries, while the export boom will increase investment in manufacturing and production, the newspaper reported citing Zhang Yu, chief analyst from Huachuang Securities.

China will push forward tri-lateral free trade negotiations with South Korea and Japan, seek deals with Israel and Norway, while preparing to join the CPTPP after concluding the China-E.U. investment treaty, the newly appointed Minister of Commerce Wang Wentao said in an interview with Xinhua News Agency. The ministry will also promote consumption by boosting auto sales, including giving credit for trade-in vehicles and tapping into rural demand, Wang said.

Multiple provinces including the capital Beijing have taken measures to limit traveling during the coming Lunar New Year season to contain an apparent rise in coronavirus inflections, including asking state employees to spend the holidays at home, China News Service reported. Shijiazhuang, the capital city of Hebei province bordering Beijing, reported 31 new Covid-19 cases on Thursday, prompting local authorities to implement lockdowns and close off road transportation, the agency said.