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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
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
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
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
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