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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI China Daily Summary: Tuesday, Aug 27
MNI (MNI (BEIJING)) - EXCLUSIVE: China's plans to increase steel production using the low-carbon direct reduced iron (DRI) process over the next 10 years will reduce Beijing’s reliance on Australian iron ore by potentially tens of millions of tonnes per annum, as the technique favours magnetite ores more common to mines in Guinea and South America, a Chinese commodity expert has told MNI.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY472.5 billion via 7-day reverse repos, with the rate unchanged at 1.70%. The operation led to a net injection of CNY323.4 billion after offsetting maturities of CNY149.1 billion, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.8735% from 1.9594%, Wind Information showed. The overnight repo average decreased to 1.6575% from 1.8551%.
YUAN: The currency weakened to 7.1296 against the dollar from 7.1188 on Monday. The PBOC set the dollar-yuan central parity rate lower at 7.1325, compared with 7.1415 on Monday.
BONDS: The yield on 10-year China Government Bonds was last at 2.1300%, up from Monday's close of 2.100%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged down 0.24% to 2,848.73 while the CSI300 index fell 0.57% to 3,305.33. The Hang Seng Index increased 0.43% to 17,874.67.
FROM THE PRESS: Public revenues fell during the first seven months of the year weighed down by sluggish economic growth and a continuous decline of some energy and mineral product prices, according to Luo Zhiheng, chief Economist at Yuekai Securities. China saw the national general public budget revenue decrease by 2.6% y/y during the first seven months, while the national government fund budget revenue went down 18.5% y/y. Authorities can improve land-use revenue, which fell 22.3% y/y, by further lifting purchase restrictions in first tier cities and reducing mortgage interest rates.
Local governments are now strictly prohibited from borrowing funds for municipal infrastructure projects which have little return, as authorities try to curb off-balance-sheet debt, Shanghai Securities News reported, citing a document by the Ministry of Finance and five other departments. Income from infrastructure projects funded by local government special bonds should be used for interest and principal repayment, the statement said.
The People’s Bank of China will likely cut the reserve requirement ratio by 0.25-0.5 percentage points in Q3, with a 10-15 basis point policy rate cut likely in Q4, Yicai.com reported, citing Dong Ximiao, chief researcher at the Merchants Union Consumer Finance. Market expectations of a Federal Reserve rate cut in September will help ease yuan depreciation momentum, while further PBOC cuts will alleviate downward pressure on the economy, Dong said. Banks’ liability costs have declined following lower deposit rates, allowing for Loan Prime Rates cuts needed to reduce financing costs.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.