MNI China Daily Summary: Tuesday, November 28

POLICY: The People’s Bank of China (PBOC) will keep monetary policy accommodative to support the economy, as focus shifts to improving economic structure and forming new growth drivers, said PBOC Governor Pan Gongsheng in a keynote speech at the HKMA-BIS High-Level Conference, according to a statement on the central bank website.

LIQUIDITY: The PBOC conducted CNY415 billion via 7-day reverse repo, with the rate unchanged at 1.80%. The operation has led to a net injection of CNY96 billion after offsetting the maturity of CNY319 billion reverse repos today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 2.1105% from 2.1288%, Wind Information showed. The overnight repo average fell to 1.6963% from 1.7868%.

YUAN: The currency weakened to 7.1519 against the dollar from 7.1485 on Monday. The PBOC set the dollar-yuan central parity rate lower at 7.1132, compared with 7.1159 set on Monday. The fixing was estimated at 7.1435 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.7000%, down from Monday's close of 2.7150%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.23% to 3,038.55, while the CSI300 gained 0.19% to 3,518.52. The Hang Seng Index fell 0.98% to 17,354.14.

FROM THE PRESS: Chinese authorities have ordered banking institutions to increase gradually the proportion of loans to private companies and set annual targets to raise services offered to private enterprises in their performance appraisals, according to a list of 25 measures released by the PBOC and seven other departments on Monday aimed at improving private enterprise. Companies in technological innovation, green and low-carbon areas would benefit most, and banks should reasonably increase the tolerance of non-performing loans of private companies by establishing exemption mechanisms, the document said. (Source: PBOC Website)

China’s economy has a solid foundation to achieve its end of year economic goals following Q3 GDP growth of 4.9%, according to the People’s Bank of China’s third quarter annual report. Going forward, policymakers will pay more attention to cross-cyclical and counter-cyclical adjustments and promote the steady decline in real-economy financing costs using the guiding role of policy interest rates. The PBOC will also adjust housing credit policies and lower mortgage interest rates and existing first-home loan interest rates. Authorities will also deepen market-oriented reforms and maintain the basic stability of the yuan at a reasonable and balanced level.

China will approve the advancement of CNY2.28 trillion of new special bonds before year end, according to experts interviewed by Securities Daily. Song Xiangqing, vice president at the Industrial Economic Research Center, said the government needed to advance the bonds to expand effective investment in local construction projects and stabilise the macroeconomy. Feng Lin, senior analyst at Oriental Jincheng Research, said policymakers must keep infrastructure investment high to maintain a stable GDP growth rate. (Source: Securities Daily)