MNI China Daily Summary: Tuesday, September 24
POLICY: The People’s Bank of China will cut its 7-day reverse repo rate by 20 basis points to 1.5% and the reserve requirement rate by 50bp to support the economy, Governor Pan Gongsheng told reporters.
POLICY: The PBOC will lower rates of existing mortgages by 50 basis points on average and reduce the down-payment ratio for second-home buyers to 15% to support the real-estate market and boost consumption, and investment, Governor Pan Gongsheng told reporters.
POLICY: Recent major central bank interest rate cuts have eased depreciation pressure on the yuan, People's Bank of China Governor Pan Gongsheng told reporters.
POLICY: China's central bank believes conditions for buying and selling treasury bonds are maturing and officials will work gradually to introduce trading into their toolkit, said Governor Pan Gongsheng.
POLICY: China plans to increase the core tier-one capital of six major commercial banks to strengthen their capacity to serve the economy and enhance their stable operations, Li Yunze, head of the National Financial Regulatory Administration told reporters.
POLICY: The PBOC will look to create two new targeted tools to help stabilise the stock market, an unprecedented move by the central bank, PBOC Governor Pan Gongsheng told reporters.
LIQUIDITY: The PBOC conducted CNY460 billion 14-day reverse repos, with the rate at 1.85%. The operation led to a net injection of CNY460 billion as no reverse repos mature today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.9173% from 1.8850% on Monday, Wind Information showed. The overnight repo average decreased to 1.7708% from 1.9181%.
YUAN: The currency strengthened to 7.0385 against the dollar from 7.0587 on Monday. The PBOC set the dollar-yuan central parity rate lower at 7.0510, compared with 7.0531 set on Monday.
BONDS: The yield on 10-year China Government Bonds was last at 2.0250%, up from Monday's close of 1.9850%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index edged up 4.15% to 2,863.13, while the CSI300 index was up 4.33% to 3,351.91. The Hang Seng Index rose 4.13% at 19,000.56.
FROM THE PRESS:
Authorities should issue minimum living subsidies to all jobless residents that do not receive unemployment benefits using information technology and community management experience, wrote Jia Kang, founding president at the China Academy of New Supply-side Economics. Authorities should also raise special treasury funds to ensure the basic operations and salary payments of local governments to reduce their motivation to increase fines and confiscations to raise revenue, Jia said. (Source: Yicai.com)
Beijing city is expected to scrap standards for ordinary and luxury residential housings which will help reduce transaction taxes on housings above 120 square meters and support upgrade demand, 21st Century Business Herald reported citing analysts. The capital city still has the strictest purchase restriction policy in China, leaving room for relaxation, the newspaper said citing Chen Wenjing, research head at China Index Academy. Beijing also needs to play a leading role to stabilise market expectations, Chen added.
Personal non-performing loan (NPL) transfers accelerated significantly in Q2, increasing by 547.67% to CNY27.9 billion from Q1’s CNY4.3 billion, 21st Century Business Herald reported. Personal NPLs are more difficult to deal with compared to corporate loans due to the lack of collateral, while local asset-management companies, the main recipients of NPLs, are finding it increasingly hard to dispose of them as their number grows.