MNI China Daily Summary: Tuesday, November 6

     TOP NEWS: China will take measures to further open its financial market to

foreign investors, allowing them to obtain full ownership rights and acquire any

necessary licences, especially in the areas of banking, securities, funds,

futures and life insurance, Chinese Premier Li Keqiang said during his meeting

with IMF managing director Christine Lagarde in Beijing on Tuesday, according to

the official website of the Chinese government. Li also stated that Beijing will

implement larger scale tax cuts and fee reductions and will work on more broadly

lowering market transaction costs. In terms of monetary policy, rather than

flooding the market with liquidity, the authorities will take a more targeted

approach by supporting private SMEs, Li added.

     POLICY: U.S. tariffs are knocking 0.2 percentage points off Chinese GDP

growth, but a full-blown trade war could increase the damage to 0.9 percentage

point, a senior economist with links to the Chinese government said. Zhang Ming,

a director at the Research Institute of World Economy and Politics under the

Chinese Academy of Social Sciences, said that downward economic pressure has

been worse than shown by official data, prompting the government to step up its

policy responses. Growth could slow from 6.5% to 6.6% this year to 6.3% in 2019,

with the low point coming in the second quarter before a pick-up in the second

half, Zhang said.

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations

(OMOs) on Tuesday, leaving liquidity unchanged. No reverse repos mature today,

according to Wind Information. The central bank said the liquidity in the

banking system is at a reasonable and ample level.

     RATE: The 7-day weighted average interbank repo average rate for depository

institutions (DR007) decreased to 2.5652% from Monday's close of 2.6206%, Wind

Information showed. The overnight repo average decreased to 2.2494% from

Monday's 2.4131%.

     YUAN: The yuan appreciated to 6.9133 against the U.S. dollar from Monday's

close of 6.9265. The PBOC set the yuan central parity rate weaker for the first

time in three days at 6.9075, compared with Monday's 6.8976.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.5100%, down from the closing price of 3.5275% on Monday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 0.23% lower at

2,659.36. Hong Kong's Hang Seng Index increased 0.72% to 26,120.96.

     FROM THE PRESS: China is willing to talk with the U.S. to find an

acceptable solution for the two nations' trade conflict, Caixin reported, citing

Vice President Wang Qishan, who spoke in Singapore on Tuesday. Major world

issues require close cooperation between the two countries, in the interests of

global development and stability, Caixin cited Wang as saying. The two countries

stand to gain from cooperation and will only lose by fighting, Wang said

according to Caixin. (Link to the story: https://bit.ly/2JG0M1u)

     China's real estate industry isn't entering a "cold winter" and the recent

price correction is a positive outcome of the crackdown on speculation, the

Economic Daily commented. Prices of homes in 67 out of 70 cities in September

were either flat or increased slightly from August, and developers are still

enthusiastic about the future, as evidenced in the 9.9% y/y gain in September

real estate investment, the newspaper said. (Link to story:

https://bit.ly/2PFuI3u)

     An increasing number of companies are using yuan in cross-border trade,

said Huo Yingli, director of the Monetary Policy Bureau of the People's Bank of

China, in a forum during the International Import Expo in Shanghai on Tuesday,

Shanghai Securities News reported. Cross-border use of renminbi has exceeded

CNY10 trillion so far this year, growing strongly from 2017, Huo said. (Link to

the story: https://bit.ly/2yVEW6a)

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; +44208-865-3829; email: Jason.Webb@marketnews.com

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