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Free AccessMNI China Daily Summary: Tuesday, January 30
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY563 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The reverse repo operation has led to a net injection of CNY98 billion reverse repos after offsetting CNY465 billion maturity today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.9385% from 1.9401%, Wind Information showed. The overnight repo average fell to 1.6155% from 1.7160%.
YUAN: The currency strengthened to 7.1773 against the dollar from the previous 7.1797. The PBOC set the dollar-yuan central parity rate lower at 7.1055 on Tuesday, compared with 7.1097 set on Monday. The fixing was estimated at 7.1739 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.4450%, down from the previous close of 2.4880%, according to Wind Information.
STOCKS: The Shanghai Composite Index tumbled 1.83% to 2,830.53, while the CSI300 lost 1.78% to 3,245.04. The Hang Seng Index fell 2.32% to 15,703.45.
FROM THE PRESS: The PBOC will continue with large-scale injections via reverse repos to offset the liquidity gap due to increasing demand for cross-month capital and cash withdrawals before the Chinese New Year, Shanghai Securities News reported citing analysts. Meanwhile, about CNY2 trillion reverse repos will mature this week, with over CNY400 billion expiring daily from Tuesday to Friday. The central bank will need to inject about CNY1.5 trillion in liquidity to fill the gap, which means it still needs to inject some short-term funds after announcing a 50bp cut to bank's reserve requirement ratios that can release CNY1 trillion of long-term funds, said Li Yishuang, chief fixed income analyst at Cinda Securities.
China’s vice premier He Lifeng has called on authorities to support listed firms to promote high-quality financial development, improve confidence and stabilise the capital market. In a video conference meeting, He noted listed companies played an important role in the micro-foundation for high-quality development and support was needed to boost self-reliance in science and technology, construct a modern industrial system, and enhance market confidence. On real-estate, He urged authorities to establish a financing mechanism and implement financing projects quickly. The government would resolutely prevent illegal misappropriations of pre-sale funds, He added. (Source: Yicai)
The Hong Kong judge's decision to liquidate China Evergrande will not directly impact the group’s domestic business, according to Li Shuguang, professor at China University of Political Science and Law. Li noted each company in the group would remain an independent legal entity, as China Evergrande was an overseas holding platform company. Under this structure, domestic subsidiaries would maintain normal and orderly operations under the existing management and model, Li added. Domestic bond holders were creditors of Evergrande Real Estate and had their rights protected under Chinese law. (Source: Yicai)
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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.