MNI China Daily Summary: Thursday, October 24

     POLICY: China's ruling Communist Party will hold its fourth plenary session

of the 19th Central Committee from Oct 28-31 in Beijing, Xinhua News Agency

reported on Thursday.

     LIQUIDITY: The PBOC injected CNY60 billion via 7-day reverse repos, adding

liquidity for the fourth day, according to Wind Information. The injection aims

to offset tax payments and keep the liquidity in the banking system reasonable

and ample, the PBOC said.

     LIQUIDITY: The PBOC isn't likely to conduct targeted medium-term lending

facility (TMLF) this week after having added significant liquidity by reverse

repos, the China Securities Journal reported citing analysts. With CPI at the

government's 3% ceiling, the PBOC may feel constrained from using TMLF, as

injecting longer-term liquidity drives down long-term interest rate and weakens

the yuan, the newspaper said citing analysts including Xie Yunliang at Minsheng

Securities. The PBOC has injected net CNY500 billion via 7-day reverse repos so

far this week.

     RATES: The seven-day weighted average interbank repo rate for depository

institutions (DR007), traded between 2.3000% and 2.9000%, decreased to 2.6292%

from Wednesday's close of 2.7107%, Wind Information showed. The overnight repo

average, being traded between 2.3000% and 2.8000%, fell to 2.4466% from

Wednesday's 2.6392%.

     YUAN: The yuan strengthened to 7.0702 against the dollar from Wednesday's

close of 7.0745. The PBOC set the dollar-yuan central parity rate lower to

7.0727 from 7.0752 on Wednesday.

     BONDS: The yield on 10-year China Government Bond was last at 3.2150%, up

from the close of 3.2075% on Wednesday, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index was little changed at

2,940.92. Bank shares rose while gold, liquor and medicine declined. Hong Kong's

Hang Seng Index edged up 0.87% to 26,797.95.

     FROM THE PRESS: China aims to further stabilize foreign trade by improving

export tax rebates, financing, credit insurance and other policies, as well as

supporting the central and western regions with developing processing trade, the

State Council said following its weekly executive meeting on Wednesday,

according to a statement on its website. China will increase the import of

agricultural products, daily consumer goods, equipment, parts and components to

meet domestic demand. The meeting also confirmed 12 measures to optimize foreign

exchange management and facilitate cross-border trade and investment, according

to the statement.

     Some Chinese provinces plan to issue special-purpose infrastructure-backed

bonds in Q4 under next year's quotas, which may total as much as CNY300 billion

by Dec 31, the Shanghai Securities Journal reported citing a research by the

China Bond Rating Co. Jiangsu, Hubei, Jiangxi and Henan started a major project

boom at the beginning of Q4, the newspaper said.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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