MNI China Daily Summary: Tuesday, October 17

POLICY: China's belt and road initiative is entering a new phase of high-quality development with a focus on green transition and digitalization, according to Ren Hong Bing Chairman of the China Council For Promotion of International Trade.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY71 billion via 7-day reverse repo on Tuesday, with the rate unchanged at 1.80%. The operation has led to a net injection of CNY4 billion after offsetting the maturity of CNY67 billion reverse repos today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.8776% from 1.8087%, Wind Information showed. The overnight repo average increased to 1.8072% from the previous 1.7164%.

YUAN: The currency weakened to 7.3137 against the dollar from 7.3115 on Monday. The PBOC set the dollar-yuan central parity rate lower at 7.1796 on Tuesday, compared with 7.1798 set on Monday.

BONDS: The yield on 10-year China Government Bonds was last at 2.7250%, up from 2.7200% at Monday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.32% to 3,083.50 while the CSI300 index rose 0.35% to 3,639.40. The Hang Seng Index was up 0.75% to 17,773.34.

FROM THE PRESS: The People’s Bank of China has increased the net medium-term lending facility (MLF) amount by CNY289 billion, the highest MLF liquidity injection for 33 months, according to 21st Century Business Herald. Zhou Guannan, chief analyst at Huachuang Fixed Income, said the move showed the central bank wanted to maintain ample liquidity as conditions become tighter. Wang Qing, chief macro analyst at Oriental Jincheng, said the PBOC will continue to increase the MLF in Q4 given demand for credit extension and special refinancing bond issuance. Authorities could cut the RRR in Q4 to optimise banking sector liquidity structure and reduce the bank's capital cost, Wang said.

Leaders from the Standing Committee of the National People's Congress will meet from Oct 20-24 to consider authorising the early issuance of new local-government debt, the 21st Century Business Herald reported. As the economic situation continues to recover in Q4, authorities may decide to issue 2024 local-government bonds in advance to support the economy better. Since 2018, the early release of new local debt limits has become routine for fiscal policy in recent years, which speeds up the approval process and allows for faster use of funds.

Ten more state-owned companies in Shanghai and Shenzhen stock exchanges disclosed share buybacks or stake-hiking plans on Monday, following the sovereign fund Central Huijin raised stake in Big Four banks last week to boost market confidence. China Coal Energy, China Railway Construction, China Three Gorges and Hikvision are planning to increase holdings of company shares. There are also 13 companies on the Science and Technology Innovation Board planning for buybacks and shareholding increases, and three have voluntarily promised not to reduce their holdings. (Source: Yicai)