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MNI China Daily Summary: Thursday, September 14
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY110 billion via 7-day reverse repos, with the rates unchanged at 1.80%. The operation has led to a net drain of CNY220 billion after offsetting the maturity of CNY330 billion reverse repo today, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.9463% from 1.8884%, Wind Information showed. The overnight repo average rose to 1.7646% from the previous 1.5324%.
YUAN: The currency strengthened to 7.2701 against the dollar from 7.2789 on Wednesday. The PBOC set the dollar-yuan central parity rate lower at 7.1874, compared with 7.1894 set on Wednesday. The fixing was estimated at 7.2754 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.6700%, down from Wednesday's close of 2.6775%, according to Wind Information.
STOCKS: The Shanghai Composite Index closed up 0.11% at 3,126.55, while the CSI300 index decreased 0.08% to 3,733.51. The Hang Seng Index edged up 0.21% to 18,047.92.
FROM THE PRESS: The PBOC still has plenty of policy tools to deal with abnormal fluctuations of the yuan, following its recent movement to increase the issuance of central bank bills in Hong Kong to tighten the liquidity of offshore yuan, said Ming Ming, chief economist of CITIC Securities. The yuan may face depreciation pressure in the short term, as the U.S. dollar index remains high due to the resilience of the U.S. economy, Ming added. The PBOC should raise the forex risk reserve ratio in due course to curb herding behaviour in forex trading, said Wang Qing, analyst at Golden Credit Rating. (Source: Shanghai Securities News)
China-focused equity ETFs saw record net inflows of USD20.6 billion in Aug., despite the net selling volume of northbound funds hitting a new high last month. Some long-term investors bought low via ETFs when the A-share market experienced bearish sentiment and the influx of funds all came from listed funds in the Asia-Pacific region. However, foreign capital is expected to return to the A-share market as the economy stabilises with recent measures to shore up the real-estate sector and boost capital market. (Source: Yicai)
China will accelerate the launch of a batch of major water conservancy projects, as investment in the first eight months hit a record high. The total investment in water conservancy construction was CNY985.6 billion in the Jan-Aug period, with 23,600 new projects started, both setting a historical high, according to Minister of Water Resources Li Guoying. Meanwhile, the construction has created 1.97 million jobs, providing strong support for the economic recovery. (Source: Securities Daily)
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