Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
Reporting on key macro data at the time of release.
Real-time insight on key fixed income and fx markets.
- Emerging MarketsEmerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
- MNI ResearchMNI Research
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
- About Us
TOP NEWS: Sweeping new regulations targeting asset management products,
including banks' wealth management products, announced on Friday by the People's
Bank of China and other regulators are expected to have a negative near-term
impact on the bond market, with the containment of banks' off-balance sheet
businesses leading to weaker demand for bonds. Two core standards lie at the
heart of the new regulations: The first is a ban on banks or other financial
institutions from implicitly guaranteeing their AMPs and WMPs -- in other words,
the holders of AMPs and WMPs must now be prepared to shoulder the loss on such
products, rather than the banks and other financial institutions themselves. The
other core regulatory standard is a restriction on investment in non-standard
RATES: The Ministry of Finance bought CNY590 million in five-year treasury
bills at a yield of 3.9196% in an auction. The yield was lower than 3.9650% for
the same bonds trading in the secondary market on Monday.
LIQUIDITY: The People's Bank of China injected CNY130 billion in seven-day
reverse repos, CNY40 billion in 14-day reverse repos and CNY10 billion in 63-day
reverse repos via open-market operations on Tuesday. This resulted in a net
injection of CNY10 billion for the day, as a total of CNY170 billion in reverse
repos matured on Tuesday.
RATES: Money market rates rose. The seven-day repo average was last at
2.9144%, higher than Monday's average of 2.8973%. The overnight repo average was
at 2.8338%, also higher than Monday's 2.8061%.
YUAN: The yuan fell against the U.S. dollar after the People's Bank of
China set a weaker daily fixing. The yuan was last at 6.6362 against the U.S.
unit, compared with the official closing price of 6.6300 on Monday. The PBOC set
the yuan central parity rate against the U.S. dollar at 6.6356 on Tuesday,
weaker than Monday's 6.6271.
BONDS: The yield on benchmark 10-year China government bonds was last at
3.9600%, up from the previous close of 3.9525%, according to Wind, a financial
STOCKS: Stocks were up, led higher by shares of motorcycle manufacturers
and the financial sector. The benchmark Shanghai Composite Index closed up 0.53%
at 3,410.50. Hong Kong's Hang Seng Index was 1.10% higher at 29,582.13.
FROM THE PRESS: China's macro-prudential policy will establish credit and
property prices as anchors to stabilize the financial cycle, the Financial News,
a journal of the People's Bank of China, reported Tuesday. In today's financial
situation, it is a challenge for the PBOC to achieve its goal of stability in
prices and the financial sector. Analysts say a "two pillars" framework --
monetary policy and macro-prudential policy -- will help guarantee proper
liquidity conditions, stabilize prices and output, curb price bubbles and
prevent systemic financial risks. Regulators need to coordinate the two pillars
to accommodate economic and financial cycles, the newspaper argued.(Financial
Banks' wealth management products will have longer durations, higher
thresholds of clients and lower leverage under draft guidelines issued by top
regulators, the 21st Century Business Herald reported Tuesday. The guidelines
mainly focus on implicit guarantees of payment, leverage, channel transactions,
multiple layers and capital pools. Mainstream wealth management products will be
divided into two categories: fixed-asset products and mixed mutual funds. Wealth
management products for high-level clients will be allowed to invest in
debt-to-equity swaps. Lower leverage will benefit the long-term growth of the
sector, the newspaper argued. Chinese banks have issued wealth management
products totaling CNY30 trillion, the report said. (21st Century Business
Mortgage rates for first-time home buyers in Beijing have risen 10% above
the benchmark interest rate as government controls on the property market have
continued to bite and credit from banks has shrunk, the Securities Daily
reported Tuesday. Some banks, with their credit quotas limited at the end of the
year, have even raised the rates by 40%. Even so, the approval procedure for
mortgages has been faster due to sluggish home sales in recent months, the
report said, citing unidentified people familiar with the information. In
October, the nationwide average mortgage rate was 5.3%, which was 8.2% above the
benchmark rate. Although the rise has slowed, the upward momentum remains
obvious, the newspaper said. (Securities Daily)
In a measure of its economic efficiency, China can produce the same level
of output with less capital than the previous year for the first time in at
least a decade, Caixin Magazine reported on its website Tuesday. But as China is
still being pulled by competing needs -- economic growth, financial deleveraging
and social stability -- efficiency might again end up on the back burner,
Michael Taylor, chief credit officer of Moody's Investors Service, was quoted as
saying in the report. Among the competing needs, reform and rebalancing are less
important, with the emphasis on growth and stability, Taylor said. (Caixin
--MNI Beijing Bureau; +86 (10) 8532 5998; email: firstname.lastname@example.org
--MNI Beijing Bureau; +86 (10) 8532-5998; email: email@example.com