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REALITY CHECK: China's consumer price index likely edged higher in October, as both food and energy prices rose on tighter supply, industry insiders and market analysts told MNI. "CPI is expected to rebound to 1.3% y/y from September's 0.7% gain," said Wang Jingwen, a senior researcher at the Pangoal Institution, pointing to rising food and fuel costs.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY100 billion via 7-day reverse repos with the rates unchanged at 2.2%. The operation led to a net injection of CNY90 billion after offsetting the maturity of CNY10 billion reverse 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 2.1819% from Monday's close of 2.1026, Wind Information showed. The overnight repo average rose to 2.1279% from 1.9089% on Monday.
YUAN: The currency strengthened to 6.3950 against the dollar from Monday's close of 6.3981. The PBOC set the dollar-yuan central parity rate lower at 6.3903, compared with the 6.3959 set on Monday.
BONDS: The yield on 10-year China Government Bonds was last at 2.9250%, flat from Monday's close, according to Wind Information.
STOCKS: The Shanghai Composite Index gained 0.24% to 3,507.00, while the CSI300 index fell 0.03% to 4,846.74. The Hong Kong's Hang Seng Index increased 0.20% to 24,813.13.
FROM THE PRESS: The PBOC's new lending tool introduced on Monday, which carries a below-market rate, was aimed at facilitating banks' lending to carbon-neutral transition and not a short-term credit stimulus, the Securities Times reported citing Zhang Xu, chief fixed-income analyst with Everbright Securities. The new tool will focus on supporting three key areas of clean energy, energy conservation, and emission-reduction technologies, with a one-year lending rate of 1.75%. Though the rate is lower than other structural tools like re-lending and rediscounting, Zhang noted it does not represent a change in the direction of monetary policy, the newspaper said. This structural tool is limited in scale and impact, the newspaper cited Zhang as saying.
China's infrastructure investment may only provide "moderate" support to the economy in the short term, the Securities Times reported citing experts. The newly launched large projects may not translate into a substantial volume of work right away, and the overall size of the new-energy and new-infrastructure projects is relatively small, said the newspaper, one of the officially run securities dailies. Infrastructure could possibly register a noticeable rebound by H1 of 2022, the newspaper said. Q4 growth faces increasing "downward pressure" given the risk of slowing property demand and exports, making the countercyclical infrastructure building more necessary, the newspaper said. While the size of the projects started in Q4 may exceed CNY1 trillion, the impact from large projects usually takes 3-5 years to materialize, it said.
China is devising new measures to further widen the opening of the capital market, including expanding channels for foreign investments in domestic futures, expanding the Shanghai-London Stock Connect, and making it easier for global companies to list domestically, the newspaper said. China's economic and capital market growths should attract much greater capital, the journal said. Foreign funds purchased over CNY320 billion A-shares through Stock Connect in the first 10 months of this year, near the record reached in 2019, it said.
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