MNI China Daily Summary: Tuesday, October 8
POLICY: China will bring forward next year’s central government budget investment of CNY100 billion to accelerate infrastructure spending and continue to issue ultra-long-term special treasury bonds in 2025 to support major projects, Zheng Shanjie, director of National Development and Reform Commission told reporters.
POLICY: China will push local governments to speed up fiscal spending in a bid to support the economy while helping them carry out debt swaps and resolve debt risks, officials at the National Development and Reform Commission told reporters.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY41.7 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY886.9 billion after offsetting maturities of CNY928.6 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.7530% from the previous 1.5552%, Wind Information showed. The overnight repo average increased to 1.5251% from 1.5197%.
YUAN: The currency weakened to 7.0535 against the dollar from the previous 7.0156. The PBOC set the dollar-yuan central parity rate higher at 7.0709 on Tuesday, compared with 7.0074 set before National Day holiday. The fixing was estimated at 7.0811 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.1850%, up from the close of 2.1510% on September 30, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index was up 4.59% to 3,489.78, while the CSI300 index rallied 5.93% to 4,256.10. The Hang Seng Index tumbled 9.41% at 20,926.79.
FROM THE PRESS: The PBOC’s latest facilities to support the capital market will not lead to an injection of base currency or balance-sheet expansion, while investors should consider their risk tolerance, wrote Xu Zhong, vice president at the National Association of Financial Market Institutional Investors. Financial institutions should strengthen internal control and compliance responsibilities, warn individual investors of risks, and strictly prevent credit funds from flowing into the stock market in disguise of consumer loans, according to Xu. (Source: Securities Times)
China’s foreign exchange reserves were USD3.32 trillion at the end of September, rising above the USD3.3 trillion mark again for the first time since December 2015, Securities Times reported citing data by the State Administration of Foreign Exchange. This was mainly due to a 0.96% decline in the U.S. dollar index over the month, alongside an appreciation of onshore yuan by 725 basis points against the greenback, the newspaper said. The accelerated allocation of Chinese assets by foreign investors following the country’s latest pro-growth measures has also provided strong support for FX stability, as the yuan continues to rise and banks' forex settlement and sales on behalf of customers have turned into a surplus, the Times said citing Wen Bin, chief economist at China Minsheng Bank.
Local housing markets heated up during the Golden Week holiday with the number of inquiries for home purchases rising, as over 130 cities launched sales promotions, Shanghai Securities News reported. A leading housing developer said visitors to its 49 projects in 12 key cities increased 79% when compared with the Mid-Autumn Festival, while the average subscription rose by 121%. Housing prices in core cities are expected to stabilise and the bottoming out of major cities will further drive the national market, the newspaper said citing Chen Wenjing, research director at China Index Academy.