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EXCLUSIVE: Chinese retail sales will pick up in the fourth quarter,
underpinning economic growth following a record low 6% y/y rise in GDP in Q3,
government advisors told MNI. The rate of expansion in retail sales may rise to
around 8% y/y in the fourth quarter, from 7.8% in September, helping to
stabilise GDP growth at 6% in the final three months of the year, said Zhang
Yiqun, director of the fiscal studies institute affiliated with the Jilin
province finance department. That would mean annual growth would fall in the
target range of 6 - 6.5%, Zhang added, suggesting that the government further
stimulates consumption by boosting incomes, reducing charges for services such
as telephones and internet, and relaxing restrictions preventing researchers,
teachers and health workers from seeking additional private incomes.
LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations
for the second day, draining net CNY250 billion liquidity given the same amount
of reverse repos maturing today, according to Wind Information. The increased
fiscal spending near month-end can offset the maturity of reverse repos, leaving
reasonable and ample level of liquidity, PBOC said.
The PBOC is likely to conduct targeted medium-term lending facility (TMLF)
this week to offset the maturity of CNY590 billion reverse repos, as the central
bank generally conducts TMLF in the fourth week of the first month at the
beginning of a quarter, the China Securities Journal reported citing unnamed
analysts. The PBOC is also likely to increase cash injection via pledged
supplementary lending (PSL) to further support infrastructure investment, the
newspaper said citing Chen Wenhu, analyst at Zhongshan Securities.
RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007)increased to 2.6765% from Friday's close of 2.6745%, Wind
Information showed. The overnight repo average fell to 2.3636% from Friday's
YUAN: The yuan weakened to 7.0637 against the dollar from Monday's close of
7.0615. PBOC set the dollar-yuan central parity rate firmer at 7.0617, strongest
since Aug 26 and compared with previous 7.0762.
BONDS: The yield on 10-year China Government Bonds was last at 3.3000%, up
from the close of 3.29000% on Monday, according to Wind Information. Yield is
likely to stabilize around 3.3%, as the market expects the Chinese economy to
pick up given improved financial data in August and September, the China
Securities Journal reported citing Zhang Jiqiang, analyst at Huatai Securities.
The faster medium- and long-term credit growth will ease the downward pressure,
the newspaper cited Zhang as saying. The yield could still rise above 3.3% if
PBOC fails to conduct TMLF as the market expects this week, the newspaper said
citing Xie Yunliang, analyst at Minsheng Securities.
STOCKS: The Shanghai Composite Index fell 0.87% to 2,954.18 as brokerage
stocks tumbled, while blockchain shares continued to rally following President
Xi Jinping's endorsement of the technology. Hong Kong's Hang Seng Index
decreased 0.39% to 26,786.76.
FROM THE PRESS: Chinese smaller property developers face increasingly
higher costs and difficulties obtaining capital as regulators rein in banks'
lending to them by ex-balance sheet channels, while overseas capital-raising
becomes more expensive, the 21st Century Business Herald reported citing Yan
Yuejin, director of the Shanghai-based E-house China Research and Development
Institution. There have been 408 property developers filing bankruptcy with
courts by Oct 27, the newspaper said citing court website. Housing prices may
face corrections, Yan was cited as saying.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: firstname.lastname@example.org
--MNI Beijing Bureau; +86 10 8532 5998; email: email@example.com