MNI China Daily Summary: Tuesday, October 15

     DATA: China's September inflation touched the 3% official government

ceiling, the fastest in almost six years, as costs of food led by pork soared.

The price of China's most consumed meat surged 69.3% y/y, picking up from 46.7%

in August. Food costs contributed 1.65 percentage points to CPI. Meanwhile,

factory-gate inflation fell further to -1.2% y/y from August's 0.8% drop,

hitting the lowest level since August 2016. 

     DATA: China's M2 rose 8.4% y/y last month, up from 8.2% in August and also

the market consensus. Aggregate financing to the economy rose to a three-month

high of CNY2.27 trillion, beating the CNY1.9 trillion forecast and up from

CNY1.98 trillion in August. New loans totaled CNY1.69 trillion, an eight-month

high, more than the CNY1.36 trillion projection and up from CNY1.21 trillion in

August.

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

(OMOs), leaving liquidity unchanged as no reverse repos matured, according to

Wind Information. The total liquidity in the banking system is reasonable and

ample, the PBOC said.

     The PBOC conducted the first phase of targeted reserve requirement ratio

(RRR) cut by 0.5 pp for city commercial banks, a move expected to release CNY40

billion long-term funds, according to a statement on the PBOC website. The

second 0.5 pp cut will take place on Nov 15, according PBOC's statement on Sept

6.

     RATES: The seven-day weighted average interbank repo rate for depository

institutions (DR007) increased to 2.6932% from Monday's close of 2.6523%, Wind

Information showed. The overnight repo average rose to 2.7055% from Monday's

2.5602%. 

     YUAN: The yuan weakened to 7.0778 against the dollar from Monday's close of

7.0669. The PBOC set the dollar-yuan central parity rate stronger at 7.0708,

compared with 7.0725 on Monday.

     BONDS: The yield on 10-year China Government Bonds was last at 3.1625%, up

from the close of 3.1600% on Monday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index edged down 0.56% to 2,991.05. Hong

Kong's Hang Seng Index decreased 0.07% to 26,503.93. 

     FROM THE PRESS: Depreciation pressure on the Chinese yuan has eased and

there is evidence that the currency could solidify, China Securities Journal

said in a front-page commentary. The yuan is now showing appreciation momentum

as the yuan-dollar pair has been stronger than the central parity of the yuan

against dollar, in addition to the dollar index, it said. Meanwhile, sentiment

on the yuan has also improved amid positive expectations on the trade

environment and China's economic performance in Q4, the newspaper said.

     The economic symposium hosted by Chinese Premier Li Keqiang on Monday sent

a signal that China needs to attach greater importance to stabilising economic

growth, 21st Century Business Herald reported. In a bid to buoy growth in Q4,

local governments are trying to accelerate investment in next-generation

information infrastructure, the development of integrated circuits, and the

construction of key projects in addition to boosting consumption, the newspaper

said.

     Chinese pork prices are expected to gradually decline next year as pig

production recovers, Economic Daily reported citing Zhu Zengyong, a deputy

researcher at the Chinese Academy of Agricultural Sciences. The releases of pork

reserves and increased pork imports have helped to slow the growth of pork

prices in September, the newspaper said. Pork imports were 1.16 million tones in

the first eight months, up 40.4% y/y, the newspaper added.

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

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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