Free Trial

MNI China Daily Summary: Tuesday, November 13

MNI (London)
     POLICY: The People's Bank of China (PBOC) Shanghai branch said Tuesday that
it will continue to use all tools to support private and innovation businesses,
including quickening the launch of the first batch of tools supporting private
companies issuing bonds. It will add another CNY3.55 billion of rediscount funds
for leading private companies in November, it added on its official website. On
the same day, PBOC's Tianjin branch announced it will arrange no less than CNY5
billion refinancing funds and CNY5 billion rediscount funds to increase credits
for private and small companies.
     DATA: China's M2 grew by 8% y/y in October, decelerating from September's
8.3%, and equalling June's year low. Total social financing saw a dramatic slump
in October, plunging to CNY728.8 billion, much lower than September's CNY2.21
trillion, hitting the lowest level since July 2016 (when it came in at CNY490.0
billion)n The latest data again indicates that the PBOC's current ample
liquidity failed to flow into the real economy. New loans increased CNY697
billion in October, down sharply from September's CNY1.38 trillion gain to the
lowest level this year.
     LIQUIDITY: The PBOC skipped open market operations (OMOs) Tuesday, leaving
liquidity unchanged, as no reverse repos matured, according to Wind Information.
The central bank said liquidity in the banking system is at a reasonable and
ample level.
     RATES: The 7-day weighted average interbank repo average rate for
depository institutions (DR007) increased to 2.6326% from Monday's close of
2.6048%, Wind Information showed. The overnight repo average increased to
2.4484% from Monday's 2.3034%.
     YUAN: The yuan closed at 6.9577 against the U.S. dollar after Monday's
close of 6.9661. The PBOC set the yuan central parity rate higher at 6.9629 on
Tuesday, compared with Monday's 6.9476, as the Chinese currency weakened early
for a fourth trading day.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.4500%, down from the closing price of 3.4800% on Monday, according to Wind
     STOCKS: The benchmark Shanghai Composite Index closed 0.93% higher at
2,654.88. Hong Kong's Hang Seng Index increased 0.62% to 25,792.87.
     FROM THE PRESS: China's economy could face three major financial risks in
the year ahead, including possible local government debt defaults, pressures
generated from ongoing real estate market regulation reform and the U.S. lifting
long-term interest rates beyond expectations, wrote Zhang Ming, researcher at
the Institute of World Economics and Politics under the Chinese Academy of
Social Sciences in a commentary piece published by Economic Daily on Tuesday.
Zhang suggests that the government should increase the issuance of treasury
bonds to hedge the deleveraging pressure on local governments. At same time, the
banking system should raise appropriate capital and set aside more money against
bad loans, the newspaper said citing Zhang. (Link to the story:
     Small and micro enterprises are expected to save nearly CNY1 billion in
costs if the average interest rate of borrowing from major commercial banks is
cut by 0.3 percentage point as the State Council proposed, the Securities Daily
said on Tuesday. The State Council executive meeting last Friday, deciding to
cut the average interest rate for lending to small companies by one percentage
point in the fourth quarter, compared to that in the first quarter. This will
lead to an actual 0.3 percentage point cut, the newspaper said. As of end Q3,
the average interest rate of small companies charged by 18 major commercial
banks was 6.23%, about 0.7 percentage points lower than that in the first
quarter, the Daily said, citing data from China Banking and Insurance Regulatory
Commission. (Link to the story:
     China's economy has great potential for growing consumer demand, with the
continuing trend of upgraded consumption -- where consumers buying habits move
towards higher grade items -- seen during the Double Eleven e-commerce shopping
festival last weekend, the Economic Information Daily said in a front-page
commentary Tuesday. The historical high CNY213.5 billion on turnover on Taobao,
the world's biggest e-commerce website, seen on Nov 11 underlined the spending
power of China's consumers, the Daily said. Though retail sales growth
decelerated to below 10% this year, online retail sales continues to grow at
around 30%, which will help to offset external headwinds and stabilize economic
growth. (Link to the story:
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]
MNI London Bureau | +44 203-865-3812 |
MNI London Bureau | +44 203-865-3812 |

To read the full story



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.