MNI China Daily Summary: Tuesday, November 12
EXCLUSIVE: China is likely to raise its budget deficit target for 2025 to as high as 3.5% of gross domestic product, and to increase issuance of special government bonds to provide additional stimulus for the economy, advisors told MNI, predicting authorities would announce further measures during the Central Economic Work Conference in December.
EXCLUSIVE: Chinese authorities will provide support in coming years to heavily-indebted local government off-balance-sheet financing vehicles to access more credit and equity funding, and to avoid default, as a CNY10 trillion debt swap programme announced last week excluded the vast bulk of their liabilities, policy advisors told MNI.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY125.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY107.2 billion after offsetting the maturity of CNY18.3 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) remained flat at 1.7261%, Wind Information showed. The overnight repo average increased to 1.5287% from 1.4598%.
YUAN: The currency weakened to 7.2378 against the dollar from the previous 7.1899. The PBOC set the dollar-yuan central parity rate higher at 7.1927 on Tuesday, compared with 7.1786 set on Monday. The fixing was estimated at 7.1929 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.0710%, down from the close of 2.0861% previously, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index was down 1.39% to 3,421.97, while the CSI300 index fell 1.10% to 4,085.74. The Hang Seng Index tumbled 2.84% at 19,846.88.
FROM THE PRESS: China’s e-ecommerce logistics index reached 115 points in October, up 0.6 points from September, according to the China Federation of Logistics and Purchasing. Wu Jiang, an analyst at the China Logistics Information Center, said demand for e-commerce logistics was better than expected due to strong promotional activities and was anticipated to rise further in November. The sub-index for business volume hit 133.7 points, up 2.5 points from September, while all regional sub-indexes increased, with northeast rising the most, up 4.3 points, CFLP data showed.
The People’s Bank of China will improve policy tools to deal with abnormal fluctuations in the stock market and maintain a smooth operation of the financial market, Shanghai Securities News reported. In a financial work report to the National People’s Congress Standing Committee, the PBOC said it will increase the countercyclical adjustment of monetary policy, maintain ample liquidity, and resolutely prevent the risk of exchange rate overshooting to keep the basic stability of the yuan balanced.
China’s M1 money supply decline narrowed to -6.1% in October from the previous -7.4%, as authorities began transferring fiscal funds from recent bond sales to local government agencies, according to Mingming, chief economist at CITIC Securities. A rebound in real-estate transactions after the announcement of stimulus policies further supported M1 supply as residents used funds to pay for deposits on houses. Looking ahead, Wen Bin, chief economist at Minsheng Bank, said an acceleration of fiscal-fund payments and stronger support for delivering properties will help stabilise credit. (Source: Securities Daily)