MNI China Daily Summary: Wednesday, December 26

     TOP NEWS: China's Financial Stability and Development Committee is looking

for ways to help commercial banks replenish capital, aiming to kick off

perpetual bond issuances as soon as possible, the People's Bank of China (PBOC)

said in a statement on its website today. There are no regulations or precedents

on this instrument, the 21st Century Business Herald reported today. The bearish

stock market has limited banks' ability to raise capital this year, as they can

only issue more shares to original shareholders, the newspaper said.

     LIQUIDITY: The PBOC injected CNY20 billion by 7-day reverse repos, and

CNY10 billion by 14-day reverse repos today, an eighth trading day that the

central bank has added liquidity by open market operations (OMOs). It resulted

in a net drain of CNY10 billion given the maturity of CNY40 billion of reverse

repos, according to Wind Information. The PBOC said today's OMO is to stabilize

the liquidity condition at the yearend.

     RATE: The 7-day weighted average interbank repo average rate for depository

institutions (DR007) increased to 2.7502% from Tuesday's close of 2.5735%, Wind

Information showed. The overnight repo average decreased to 1.9536% from

Tuesday's 1.9952%.

     YUAN: The yuan appreciated to 6.8821 against the U.S. dollar from Tuesday's

close of 6.8860. The PBOC set the dollar/yuan central parity rate at 6.8845

today, compared with 6.8919 on Tuesday.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.3000%, down from the closing of 3.3200% on Tuesday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 0.26% lower at

2,498.29. Hong Kong market is closed for Christmas holiday.

     FROM THE PRESS: China's GDP is forecast to grow 6.3% in 2019, down 0.3

percentage point from this year, Financial News, a newspaper run by the People's

Bank of China, said today citing a report by the Chinese Academy of Social

Sciences. The slowdown is due to the declining labor supply and slowing

productivity, as well as slower growth of capital, the newspaper said citing the

report.

     China's monetary policy may be characterized by mostly targeted controls

next year as ways to direct liquidity into the real economy, said Economic

Information Daily today citing economists. China is expected to have two or

three cuts to reserve requirement ratios next year, which will again be mainly

targeted cuts. China is unlikely to cut broad interest rates given that the

current deposit and lending benchmark rates are already at historical lows, the

Daily said citing a report by the Bank of Communications Financial Research

Center.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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