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LIQUIDITY: The People's Bank of China (PBOC) injected CNY2 billion via 7-day reverse repos with the rates unchanged at 2.00%. The operation led to a net drain of CNY13 billion after offsetting the maturity of CNY15 billion reverse repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8193% from the close of 1.7403% on Monday, Wind Information showed. The overnight repo average rose to 1.7458% from the previous 1.6241%.
YUAN: The currency weakened to 7.2620 against the U.S. dollar from the previous close of 7.2405. The PBOC set the dollar-yuan central parity rate lower at 7.2150, compared with 7.2292 set on Monday.
BONDS: The yield on the 10-year China Government Bond was last at 2.6840%, down from Monday's close of 2.7025%, according to Wind Information.
STOCKS: The Shanghai Composite Index lost 0.43% to 3,064.49, while the CSI300 index edged down 0.69% to 3,749.33. Hong Kong's Hang Seng Index decreased 0.23% to 16,557.31.
FROM THE PRESS: China's foreign exchange reserves rose USD23.5 billion to USD3.05 trillion at the end of October on exchange rate conversions and asset price changes after two consecutive months of slight declines, 21st Century Business Herald reported. Non-U.S. dollar assets increased on the appreciation of euro and pound as the U.S. Dollar Index fell by 0.5% in October, while the equity assets in FX reserves also rose significantly amid the rally in the S&P 500, Euro Stoxx 50 and Nikkei 225, the newspaper said citing analysts. Compared with Japan, South Korea and other Asian countries, which have seen a fall in reserves amid currency intervention, China’s larger reserves may offer a stronger deterrent against speculative capital and better support the yuan, the newspaper said citing an unnamed FX trader in Hong Kong.
The National Development and Reform Commission has issued a document containing 21 measures to increase support for the development of private investment, China Securities Journal reported. It will support private investment in the construction of 102 major projects, as well as technological innovation projects. The NDRC will launch a number of "green light" investment cases to regulate and guide the healthy development of private investment. It will also guide financial institutions to increase credit support and reduce the level of loan interest rates and financing expenses for private enterprises, the newspaper said.
China will face increased downward pressure on exports as the leading PMI index of major countries weighted by China’s exports has declined rapidly since June, wrote Zhong Zhengsheng, chief economist of Ping An Securities in a commentary published by Caixin. He said stabilising economic growth requires greater progress in boosting domestic investment. The 0.3% y/y decline in October exports was mainly attributed to the fall in mechanical and electrical products and labor-intensive products, as real estate-related products - such as home appliances, audio and video equipment, and lamps - dropped sharply following the cooling in the European and American property markets. Exports to U.S. and EU have become a significant drag, while exports to ASEAN countries remain positive.
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