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Corrective Cycle


Holds Onto Recent Corrective Gains


Timeline of key events (Times BST)


Sharp Reversal Lower


Timeline of key events (Times CET)

     POLICY: China on Tuesday urged businesses to resume operations to minimize
the impact of the coronavirus epidemic on the economy, despite restrictions
placed on workers and logistics due to the ongoing coronavirus outbreak. Local
authorities must not set conditions to restrict production or detain those
permitting operations to resume early, said Ou Xiaoli, director of the social
development department at the National Development and Reform Commission.
     LIQUIDITY: The People's Bank of China (PBOC) injected CNY100 billion via
7-day reverse repos with the rate unchanged. This resulted in a net drain of
CNY280 billion after the maturity of CNY380 billion reverse repos, according to
Wind Information. The operation aims to offset the maturity of reverse repos and
maintain ample liquidity in the banking system, PBOC said in a statement on its
     RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) decreased to 2.1510% from 2.1521% on Monday, Wind
Information showed. The overnight repo average fell to 1.5292% from 1.5847% on
     YUAN: The yuan strengthened to 6.9775 against the dollar from 6.9853 on
Monday. PBOC set the dollar-yuan central parity rate higher at 6.9897 compared
with Monday's 6.9863.
     BONDS: The yield on 10-year China Government Bonds was last at 2.8550%, up
from the close of 2.8075% on Monday, according to Wind Information.
     STOCKS: The Shanghai Composite Index gained 0.39% to 2,901.67. Hong Kong's
Hang Seng Index rallied 1.26% to 27,583.88.
     FROM THE PRESS: China must resume construction and begin new projects to
help minimise the impact of the coronavirus epidemic on the economy, Xinhua News
Agency reported citing President Xi Jinping. Xi also calls for further
development of online commerce and the consumption of healthcare. China should
also pay close attention to employment issues and prevent mass layoffs, while
increasing financial and labour support for companies affected by the epidemic,
Xinhua cited Xi as saying.
     China's M2 likely rose 8.7% y/y in January supported by liquidity
injections from the central bank, bond sales and increased lending and credits,
the China Securities Journal reported citing Tang Jianwei, chief analyst with
the Bank of Communications. Credit growth in January should be higher than in
2019 after the central bank lowered the required reserve ratios and conducted
open market operations to provide liquidity, the newspaper cited Tang as saying.
     China's CPI is likely to be below 5% y/y in February, compared with 5.4% in
January, as the carryover effect diminishes and consumption declines, the
Economic Daily reported citing Liu Xuezhi, a senior analyst with the Bank of
Communications. The current coronavirus epidemic will not lead to overall
inflation, the newspaper cited Liu as saying.
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
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