MNI China Daily Summary: Tuesday, January 14
POLICY: The People’s Bank of China (PBOC) will take further measures to ensure a stable yuan exchange rate while strengthening counter-cyclical moves to support the economy, deputy-governor Xuan Changneng told a press conference.
POLICY: China’s government bond yields will eventually reflect the improvement in expected economic fundamentals, Zou Lan, director at the PBOC's Monetary Policy Department, told reporters.
DATA: Banks extended CNY990 billion in new loans in December, up from November's CNY580 billion, data released by the PBOC showed. Total social financing rose by CNY2.86 trillion, higher than growth of CNY2.34 trillion in November. Growth in M2 was 7.3% y/y, up from November's 7.1% growth and meeting the 7.3% forecast.
LIQUIDITY: The PBOC conducted CNY55.0 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY47.9 billion after offsetting the maturity of CNY7.1 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.2972% from 2.0223%, Wind Information showed. The overnight repo average rose to 1.9656% from 1.8675%.
YUAN: The currency strengthened to 7.3303 against the dollar from the previous 7.3314. The PBOC set the dollar-yuan central parity rate lower at 7.1878, compared with 7.1885 set on Monday. The fixing was estimated at 7.3202 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.6255%, down from the close of 1.6525% previously, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index rallied 2.54% to 3,240.94, while the CSI300 index rose 2.63% to 3,820.54. The Hang Seng Index gained 1.83% at 19,219.78.
FROM THE PRESS: China’s top securities watchdog will make every effort to stabilise and boost the capital market in 2025 by leveraging the central bank's two structural monetary tools, and responding to market concerns promptly, according to a statement on the China Securities Regulatory Commission website. The CSRC will further facilitate the entry of medium and long-term funds, improve overseas listing registration, and expand cross-border connectivity of the capital market, the statement said.
China’s expansion of new infrastructure and energy industries in 2025 will drive growth in demand and prices for non-ferrous metal, noted Wang Hongying, dean at the China Financial Derivatives Investment Research Institute. Zeng Ning, deputy director at CITIC Futures, noted the real-estate sector will drag demand for commodities in the foreseeable future. Crude steel production is expected to decline in 2025 due to insufficient domestic demand, low industrial profits and output control policies, according to Wang Guoqing, director at the Lange Steel Network Research Centre, who also noted steel exports will decrease in 2025 to around 80-100 million tonnes due to increased global tariffs. (Source: 21st Century Business Herald)
China can maintain low single digit export growth in 2025 despite rising trade tensions with the U.S., supported by international trade accelerating from 3.1% in 2024 to 3.4% this year, according to Feng Lin, executive director at Orient Securities, who noted China’s exports have never contracted when global growth was positive. Feng said U.S. trade tensions will be mitigated by the flexibility and resilience of exporters as demonstrated during the first trade war from 2018 to 2019. Additionally, the relatively high prosperity of the global electronics industry, new energy vehicles and cross-border e-commerce will firm up demand for exports.