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Updated Barclays/Bbg Extension Estimates for US


Late Session Selling


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     POLICY: China will continue to push bank recapitalization through the use
of perpetual bonds and other channels to help banks raise capital, China's
central bank and banking regulator told reporters on Tuesday. Perpetual bonds
help banks meet the increasing need for capital given their rapid growth and
stricter regulations curbing off-balance sheet assets, said Pan Gongsheng, a
deputy governor of the People's Bank of China (PBOC).
     TRADE: China's Vice Premier Liu He will lead a trade delegation to
Washington D.C. on Thursday and Friday for the seventh round of high-level talks
with U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary
Steven Mnuchin, Xinhua News Agency reported today.
     DATA: China's capital outflow slowed in January from December as indicated
by FX purchase positions published today by the PBOC. The purchase positions
last month fell for the sixth month, down CNY1.21 billion to CNY21.25 trillion,
compared with CNY4.04 billion reduction in December, according to the PBOC. 
     LIQUIDITY: The PBOC skipped open market operations (OMOs) for the seventh
day, leaving liquidity unchanged, with no reverse repo maturing today, according
to Wind Information. The PBOC website said cash returning to the banking system
pushed up total liquidity.
     RATE: The 7-day weighted average interbank repo rate for depository
institutions (DR007) increased to 2.3500% from Monday's close of 2.2597%,
according to Wind Information. The overnight repo average rose to 1.9500% from
1.8245% on Monday.
     Yuan: The yuan depreciated to 6.7675 against the U.S. dollar from Monday's
close of 6.7671. The PBOC set the dollar-yuan central parity rate at 6.7642
today, lower than the 6.7659 set on Monday.
     STOCKS: The benchmark Shanghai Composite Index rose 0.05% to 2,755.65. Hong
Kong's Hang Seng Index decreased 0.42% to 28,228.13.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.1380%, up 2bps from the close of Monday, according to brokers.
     FROM THE PRESS: A rebound in the Chinese economy in Q3 may be stronger than
expected as pro-growth policies take effect, the Economic Information Daily said
in a front-page commentary. Performance in the 1H may also be better than
previous projections given the government's so-called countercyclical adjustment
policies and looser credit environment, the paper said.
     The further internationalization of the yuan will help China lower
financial risks, stabilize the exchange rate and ease capital outflow pressure,
according to a report by the PBOC published by China Business News. Control over
capital flows should still be maintained even with the currency's reform,
according to the report. 
     China unveiled a plan for closer integration of the Guangdong-Hong
Kong-Macau Greater Bay Area, urging the region to seek innovation-based growth,
boost advanced manufacturing, emerging industries and modern services, and be
internationally recognized and competitive by 2035, according to a statement on
the State Council's website on Monday. 
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]