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EXCLUSIVE: China may relax capital controls to make it easier for foreign investors to participate in the asset restructuring of troubled companies as it anticipates more failures among its biggest and most indebted conglomerates, but the lack of transparency over asset ownership poses a barrier, economists and policy advisors told MNI. Assets worth trillions of yuan may need to be disposed of following the long-expected bankruptcy of HNA Group, which has hundreds of affiliates, together with the restructuring by China Fortune Land Development, the country's 12th biggest developer, and by conglomerates Founder Group and Yurun Group. All four announced restructuring plans end January.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY100 billion via 14-day reverse repos with rates unchanged at 2.35% today. This keeps the liquidity unchanged after offsetting the maturity of CNY100 billion repos today, according to Wind Information. The operation aims to maintain stable liquidity before the Spring Festival, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) declined to 2.2513% from the 2.3168% on Thursday, Wind Information showed. The overnight repo average dropped to 1.8793% from the previous 2.0549%.
YUAN: The currency weakened to 6.4810 against the dollar from 6.4629 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 6.4710 today. This compares with the 6.4605 set on Friday.
BONDS: The yield on 10-year China Government Bond was last at 3.2700%, down from Thursday's 3.2800%, according to Wind Information.
STOCKS: The Shanghai Composite Index fell 0.16% to 3,496.33, while the CSI300 index gained 0.17% to 5,483.41. Hang Seng Index increased 0.60% to 29,288.68.
FROM THE PRESS: The PBOC's net injection of CNY96 billion this week through OMOs was restrained and reflected the prioritization of stability, the Securities Times wrote in a front-page article citing industry analysts. The PBOC's tighter-than-usual liquidity operations were due to significant increases in fiscal spending and the need to prevent risks, the newspaper reported citing Wang Tao, a chief economist with UBS. China should expect the gradual normalization of monetary policies after March, as domestic growth continues and global pandemic controls progress, Wang said.
The PBOC's benchmark rate for deposits will be retained over the long term and serve as a cornerstone, the central bank said in a statement on Thursday. The PBOC urged regional banks to focus on their own operations, warning them not to attract deposits from areas outside their permitted regions, according to the statement. The PBOC will continue controlling unregulated deposit products to maintain market order, it said.
Launching the digital yuan in China strengthens the regulation of non-bank payment markets and prevents institutions from monopolizing transaction data, the Economic Information Daily said in a front-page editorial. The digital yuan can help counter the decentralized, large-scale trading of cryptocurrencies, which harm China's sovereignty over its currency, the editorial said. The digital yuan will also further expand the scope of current digital payment methods, according to the Daily.
China's Foreign Ministry says it has demanded an apology from the BBC's Beijing bureau and lodged a "solemn representation" over a report it said recycled claims of China's attempt to cover up the source of the coronavirus outbreak. The report broadcast on Jan. 29 was "typical fake news with ideological bias" that smeared and attacked China, the Ministry said, adding it reserves the right to take further action. Also on Thursday, regulators in the U.K. withdrew the broadcasting license of CGTN, the overseas arm of the official China Central Television, citing that CGTN repeatedly breached impartiality standards with its coverage.