MNI China Daily Summary: Tuesday, November 26
POLICY: China will continue opening up and working towards a multi-polar and inclusive global economic system, despite the world entering a period of turbulence, Han Zheng, vice president of the People's Republic of China said.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY299.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY11.0 billion after offsetting the maturity of CNY288.3 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.7481% from 1.7680%, Wind Information showed. The overnight repo average fell to 1.4280% from 1.4711%.
YUAN: The currency weakened to 7.2578 against the dollar from the previous 7.2462. The PBOC set the dollar-yuan central parity rate lower at 7.1910, compared with 7.1918 set on Monday. The fixing was estimated at 7.2394 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.0525%, up from the close of 2.0500% previously, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index was down 0.12% to 3,259.76, while the CSI300 index fell 0.21% to 3,840.18. The Hang Seng Index edged up 0.04% at 19,159.20.
FROM THE PRESS: The PBOC is likely to cut the reserve requirement ratio by 0.25-0.5 percentage points soon to ease funding pressure following increased local government bond sales in the first half of December and offset the maturity of CNY1.45 trillion of medium-term lending facilities next month, Securities Daily reported citing analysts. The PBOC rolled over the CNY1.45 trillion November MLF maturity with only CNY900 billion MLF on Monday, which signaled an RRR cut by year-end. It will also help reduce the liability costs of commercial banks as the current MLF rate of 2% is higher than the one-year certificate of deposit rate of about 1.87%, the newspaper said citing analysts.
The PBOC will tilt policies toward private and small and medium-sized enterprises, and improve the efficiency of bank-enterprise matching to strengthen financial services, according to a statement on its website. Banks should open up a “green channel” for loan review and approval, and develop loan products that are more in line with the financing needs of tech start-ups and SMEs, expand the scope of collateral as well as accelerate loan signing and release progress, the statement said.
Beijing has approved two state-owned enterprises directly managed by the central government to issue a total of CNY500 billion in special bonds to stabilise growth and expand investment this week, China Securities Journal reported. China Reform Holdings issued CNY300 billion, while China Chengtong Holdings issued another CNY200 billion. The companies will use the proceeds to fund investment in equipment renewal and technological transformation, as well as major projects related to tech innovation and strategic emerging industries, the newspaper said citing their prospectuses.