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Free AccessMNI China Daily Summary: Tuesday, January 11
LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.2% on Tuesday. This keeps liquidity unchanged after offsetting the maturity of CNY10 billion repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.0938% from the close of 2.0471% on Monday, Wind Information showed. The overnight repo average rose to 1.9734% from the previous 1.8754%.
YUAN: The currency closed at 6.3718 against the dollar, flat from Monday's close. The PBOC set the dollar-yuan central parity rate higher at 6.3684, compared with 6.3653 set on Monday.
BONDS: The yield on 10-year China Government Bonds was last at 2.8375%, down from Monday's close of 2.8460%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged down 0.73% to 3,567.44, while the CSI300 index fell 0.96% to 4,797.77. The Hong Kong's Hang Seng Index decreased 0.03% to 23,739.06.
FROM THE PRESS: China will quicken 102 major projects announced and the use of CNY1.2 trillion local government special bonds issued in Q4 to counter the current slowdown, the Shanghai Securities News reported citing a State Council executive meeting on Monday. These measures may boost the infrastructure investment growth to more than 7% in Q1, with annual growth projected around 5% to adhere to strict controls of local debt, the newspaper said citing analysts. However, infrastructure investments will lend limited support to an economy and a quick rebound remains difficult, the newspaper said.
Foreign investors still favor Chinese yuan bonds even as the Federal Reserve accelerated tapering and potential rate hikes, as foreign holdings of yuan bonds rose CNY78 billion in December to total CNY3.68 trillion by the end of 2021, the 21st Century Business Herald reported citing data by China Central Depository & Clearing. The Fed’s tightening ahead of schedule may increase the volatility of the global financial market, which drives global investors to increase asset diversification with yuan bonds becoming their first choice for safe-haven investment due to its low correlation with the global financial market, the newspaper said. The appreciation of the yuan supported by China’s robust exports also attracted investors, the newspaper added.
Major economies should strengthen cooperation to avoid negative impact on each other as they unwind the ultra-loose monetary policies and fiscal stimulants in the post-pandemic era, the PBOC-run newspaper Financial News reported citing Xiao Yuanqi, vice chairman of China Banking and Insurance Regulatory Commission. Countries should also act to bring inflation back into an acceptable range, as it is likely to cause serious social unrest should the income growth fails to keep up with price gains, Xiao was cited as saying.
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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.