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Free AccessMNI China Daily Summary: Tuesday, October 10
TOP NEWS: China may beat its 6.5% economic growth target this year, Ning
Jizhe, director of the National Bureau of Statistics, told reporters in Beijing
on Tuesday. The economy is on a solid trajectory with "very good" employment,
lower-than-expected inflation and an overall improved environment, Ning said.
Last month's PMI reading, which was released on the Saturday before the
week-long National Day holiday, was 52.4, the highest since May 2012 and a broad
reflection of the country's prosperity, Ning said. The bureau is due to release
industrial data next week.
LIQUIDITY: The People's Bank of China injected CNY40 billion in seven-day
reverse repos on Tuesday. This resulted in no net injection or drain of
liquidity for the day, as a total of CNY40 billion in reverse repos matured. A
total of CNY100 billion in reverse repos and CNY84 billion in Medium-term
Lending Facility instruments will mature this week. The CFETS-ICAP money-market
sentiment index ended at 63 on Monday, down from 77 at the previous close on
Sept. 30. The lower the reading, the better the liquidity conditions in the
interbank market.
RATES: Money market rates were mixed. The seven-day repo average was last
at 3.0062%, compared with Monday's average of 2.9706%. The overnight repo
average was at 2.7414%, compared with Monday's 2.7648%.
YUAN: The yuan was stronger against the U.S. dollar after the People's Bank
of China set the fixing rate stronger for the day. The yuan was last at 6.5941
against the U.S. unit, compared with the official closing price of 6.6285 on
Monday. The PBOC set the yuan central parity rate at 6.6273, 0.33% stronger than
Monday's 6.6493.
BONDS: The yield on benchmark 10-year China government bonds was last at
3.6221%, compared with the previous close of 3.6011%.
STOCKS: Stocks rose, with the financial sector leading gains. The benchmark
Shanghai Composite Index closed up 0.26% at 3,382.99. Hong Kong's Hang Seng
Index was 0.49% higher at 28,466.49.
FROM THE PRESS: Risk controls in the banking sector should not only focus
on illegal transactions but also optimize management structures and enhance
regulatory coordination to support the underlying principle of avoiding systemic
risks, the Financial News, a journal run by the People's Bank of China, said in
a commentary on Tuesday. As restrictions on interbank and wealth management
businesses have been tightened, interbank assets and liabilities at the end of
August had shrunk on an annualized basis by 13.8% and 1.6%, respectively, to
CNY3.2 trillion and CNY1.4 trillion, the commentary noted. Regulators need to
improve their capacity to prevent risks from innovative financial products as
well as prepare risk emergency plans, the commentary argued. Regulators should
also strengthen their communications and coordination, which was the purpose of
establishing the Financial Stability and Development Commission, the commentary
added. (Financial News)
Short-term capital outflows are likely to occur again, as fluctuations in
cross-border capital flows are expected to increase, Guan Tao, former head of
the balance of payments division at the State Administration of Foreign Exchange
(SAFE) and now a research fellow with the Financial 40 Forum think tank, said in
a note published late Monday. According to international payment data released
by SAFE in September, private sector sentiment on the outlook for yuan
depreciation has started to rise, so if domestic and overseas economic
fundamentals show negative changes, such as a rise in the U.S dollar, capital
outflows will reappear, Guan warned. In addition, the deficit in services trade
now almost offsets the goods trade surplus, which means China's current account
surplus stands at only 1.2% of total GDP, the lowest level in 20 years, Guan
noted. This will reduce China's capacity to deal with short-term capital flow
shocks, he warned.
Reforms should be pushed forward to maintain the healthy and stable growth
of the property market, the Financial News, a journal published by the People's
Bank of China, reported Tuesday. An increase in land supply is a more
fundamental measure that can be taken to achieve a balance of supply and demand
in the property market, rather than restrictions on house purchases and mortgage
loans, the report argued. The country needs to further promote the rental
housing market and reduce the addictive attraction of home ownership, the report
added. Other relevant reforms, including improving the household registration
system and better distribution of education and medical resources, also need to
be followed up. The high reliance of local governments on land sales for fiscal
revenue also needs to be resolved via fiscal and tax reform, the report said.
(Financial News)
The statistical method for calculating GDP will be changed as of the third
quarter to include research expenditures, the 21st Century Business Herald
reported Tuesday. Research expenditures were previously classified as
intermediate costs. But the new method will add them as fixed-asset investments,
as some could bring economic improvements, the report said. The change will
increase the level of GDP, but is not expected to make a major difference in the
growth rate, the report noted. The National Bureau of Statistics will release
third-quarter GDP on Oct. 19. (21st Century Business Herald)
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.