MNI China Daily Summary: Thursday, October 25

     TOP NEWS: The People's Bank of China(PBOC) will look to keep the yuan's

exchange rate stable and it is unlikely to break below 7 in the short-term,

although the currency could turn lower at some future point as many factors

affecting it remain uncertain, a senior PBOC advisor told MNI Thursday,

expanding on comments published Wednesday. Adding to his remarks, Sheng

Songcheng said stability, not reform was the more important near-term aim for

the central bank.

     LIQUIDITY: The PBOC injected CNY100 billion via seven-day reverse repos

Thursday, the fifth consecutive day of net injections. With no reverse repos

maturing, the move resulted in a total net liquidity injection of CNY520 billion

for the past five days, according to Wind Information. The 7-day weighted

average interbank repo average rate for depository institutions (DR007)

increased to 2.5987% from Wednesday's close of 2.5946%, Wind Information showed.

The overnight repo average decreased to 2.1909% from Wednesday's 2.3700%.

     YUAN: The yuan depreciated to 6.9491 against the U.S. dollar from

Wednesday's close of 6.9401. The PBOC set dollar-yuan central parity rate higher

at 6.9409 compared with Wednesday's 6.9357.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.5400%, remain the same from the closing price on Wednesday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 0.02% higher at

2,603.80. Hong Kong's Hang Seng Index decreased 1.17% to 24954.98.

     FROM THE PRESS: Ten listed companies in Shenzhen say they have not yet

received expected bailout funds provided by state-owned enterprises (SOEs), or

"are currently in contact and negotiation stage", or "have no recent progress",

The Paper reported on Thursday. The Shenzhen government has initiated plans to

inject tens of billions of funds to ease liquidity pressures on local listed

firms amid the recent A-share rout, mainly by allowing SOEs to purchase shares,

with the Securities Times reporting Tuesday that the first batch of funds has

been issued. The A-share market rallied, pushing the Shanghai Composite Index

back above 2,600 on Wednesday, fuelled -- in part -- by the news, The Paper

said. (Link to the story: https://bit.ly/2z28qP1)

     Banks in home buyer hotspots including Beijing, Guangzhou, Hangzhou and

Foshan cities have started to cut the mortgage interest rate, 21st Century

Business Herald reported Thursday. It is the first time the cities have seen a

simultaneous mortgage rate move since last year's coordinated hikes that came

when a series of policies were introduced to cool the overheating housing

market. A loan manager at Minsheng Bank in Beijing told the paper that the rate

for a first home purchase is now around 5.75%, or 15% above the 4.9% benchmark

rate, compared to around 6% recently. However, the rate in other two first-tire

cities, Shenzhen and Shanghai remains unchanged, with no signs of a downward

adjustment, the newspaper said. (Link to the story: https://bit.ly/2JdWXR2)

     The tax cuts for individuals will bring about a direct increase in

disposable income, thereby boosting consumption, and is expected to play a

strong role in driving economic growth, said the Securities Daily on Thursday.

The as yet finalised tax deduction plan looks to deduct the cost of child

education, medical care on severe illness, elderly care, mortgage and rent, is

expected to fully cut the tax burn for taxpayers with a monthly salary of around

CNY10,000 yuan, the Daily said. However, more supporting measures are required

to truly stimulate consumption, such as increasing financial support and

reducing import tariffs on consumer goods, the newspaper said. (Link to the

story: https://bit.ly/2D7c6n0)

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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