MNI China Daily Summary: Tuesday, November 21

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY319 billion via 7-day reverse repo on Tuesday, with the rate unchanged at 1.80%. The operation has led to a net drain of CNY105 billion after offsetting the maturity of CNY424 billion reverse repos today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.0213% from 1.9805%, Wind Information showed. The overnight repo average decreased to 1.8880% from the previous 1.8926%.

YUAN: The currency strengthened to 7.1338 against the dollar from 7.1747 on Monday. The PBOC set the dollar-yuan central parity rate lower at 7.1406, compared with 7.1612 set on Monday. The fixing was estimated at 7.1682 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.6925%, up from 2.6900% at Monday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.01% to 3,067.93 while the CSI300 index rose 0.13% to 3,581.07. The Hang Seng Index was down 0.25% to 17,733.89.

FROM THE PRESS: China’s Premier Li Qiang has become director of the Central Financial Commission and chaired a recent meeting, according to a China Daily report. Officials said the commission will maintain stable monetary policy, increase support for weak links and focus on financing for new and green technology. Additionally China will strengthen financial supervision and tighten financial risk reduction responsibilities. Vice Premier He Lifeng attended the meeting also.

Analysts hold different views about further interest rate cuts after the benchmark Loan Prime Rate was kept unchanged on Monday, Yicai.com reported. Wang Qing, analyst at Golden Credit Rating believes there is still room for a 0.3 to 0.4 percentage point decline in 5-year LPR, which will lead to a greater reduction in newly issued housing mortgage rates and help reverse expectation of the property market. While Wen Bin, chief economist of China Minsheng Bank said policy rates and LPR will likely hold steady during the year under the consideration of stabilizing the exchange rate and interest spreads, noting that revitalising financial resources and improving the efficiency of capital use will be the key in the next stage.

The People’s Bank of China and the Saudi Central Bank have signed a bilateral local currency swap agreement worth CNY50 billion or 26 billion Saudi riyals, according to a statement on the PBOC website. This will help strengthen financial cooperation, expand the use of local currencies and promote trade and investment facilitation between the two countries. The agreement is valid for three years and both parties can consent to extended it, the statement said.