MNI China Daily Summary: Wednesday, December 18
EXCLUSIVE: Chinese interbank markets saw a jump in expectations for monetary easing after key meetings signalled a major policy shift, MNI’s China Money Market Index indicated, with traders expecting bond yields to continue to fall and seeing a rising possibility of a reserve requirement cut this month despite concerns over a weaker yuan.
POLICY: China’s youth unemployment rate fell two percentage points in November, marking the lowest level since June, according to the National Bureau of Statistics on Wednesday.
POLICY: The PBOC summoned financial institutions on Wednesday to warn of investment risks as China’s long-term treasury yields slumped to a record low this month.
LIQUIDITY: The PBOC conducted CNY387.6 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY309 billion after offsetting the maturity of CNY78.6 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.8058% from 1.8648%, Wind Information showed. The overnight repo average decreased to 1.4398% from 1.4456%.
YUAN: The currency weakened to 7.2856 to the dollar from 7.2840 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 7.1880, compared with 7.1891 set on Tuesday. The fixing was estimated at 7.2845 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.6875%, down from Tuesday's close of 1.6975, according to Wind Information.
STOCKS: The Shanghai Composite Index increased 0.62% to 3,382.21, while the CSI300 index rose 0.51% to 3,941.89. The Hang Seng Index edged up 0.83% at 19,864.55.
FROM THE PRESS:
The Shanghai and Shenzhen stock exchanges will halve dividend handling fees for listed companies to 0.5%₀ starting in in 2025 and waive the portion exceeding CNY1.5 million, 21st Century Business Herald reported, citing a China Securities Depository and Clearing Corporation statement. The top securities watchdog aimed to promote cash dividends and restore investor confidence, the newspaper said. The number of companies announcing dividend plans in Q3 reached 287, up 355% y/y. As of Dec 17, around 4,000 listed firms distributed about CNY2.4 trillion in dividends this year, up 10% y/y, the newspaper said.
Authorities must strengthen law enforcement supervision after an abnormal growth in fines and confiscations by local governments, Yicai.com reported citing a State Council meeting. Premier Li Qiang announced a campaign to standardise law enforcement related to enterprises will begin next year, aimed at improving the business environment and stabilising expectations, said Yicai. Fines and confiscations account for about 10% in local government's non-tax revenue, while the growth rate of non-tax revenue in October and November were up about 40% y/y, the newspaper said.
China has extended foreigner’s transit visa stay time to 240 hours from 144 hours and added 21 entry-and-exit ports for transit usage, the National Immigration Administration has announced. Qualified travellers from 54 countries including Russia, Brazil, UK, U.S., and Canada, transiting through China can enter through 60 open ports in 24 provinces, the Administration said. According to the latest statistics, from January to November 2024, 29.2 million foreigners entered the country, up 86% y/y, of which 17.4 million used visa-free entry, up 123% y/y.