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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI China Daily Summary: Wednesday, February 15
POLICY: China’s three policy banks are expected to recapitalise to meet demands for increased lending to bolster growth at a time when Beijing has taken a conservative approach to expanding the balance sheets of its central bank and fiscal authorities, policy advisers and economists said.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY203 billion of operations via 7-day reverse repos and CNY499 billion via 1-year Medium-term Lending Facility, with the rates unchanged at 2.00% and 2.75% respectively. The operation led to a net drain of CNY239 billion after offsetting the maturity of CNY641 billion reverse repos and CNY300 MLF today, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.0086% from the close of 1.9637%, Wind Information showed. The overnight repo average increased to 1.9230% from the previous 1.5580%.
YUAN: The currency weakened to 6.8451 against the dollar from 6.8165 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 6.8183, compared with 6.8136 set on Tuesday.
BONDS: The yield on the 10-year China Government Bond was last at 2.9050%, lower than Tuesday's close of 2.9075%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged down 0.39% at 3,280.49, while the CSI300 index decreased 0.52% to 4,123.69, The Hang Seng Index was down 1.43% to 20,812.17.
FROM THE PRESS: Migrant workers returning to their hometowns will aid the real estate market recovery in 2023 as local governments promote policies to stimulate demand, according to the 21st Century Business Herald. The paper referenced several real estate exhibitions held during the Spring Festival, with authorities offering multiple incentives such as low down-payments and large discounts. The release of pent-up demand following the easing of Covid controls, ongoing urbanisation, and migrant workers returning to their hometowns to settle were factors benefiting the property market recovery in lower tier cities, according to the paper.
Recent high-frequency data shows China’s economic recovery is gaining strength, which lays a good foundation for the economy in 2023, according to Shanghai Securities News. From January 30 to February 5, offline sales revenue for home appliances were up 41% y/y, and online sales up 158%. The paper said traffic and mobility flows in areas surrounding 100 leading incubators increased 17% in January m/m and 8.5% y/y, showing a rebound in the start-up sector. Job vacancies in the top 80 cities were up 14.3% m/m, according to the paper.
More policy stimulus is needed to convert excess savings into consumption, as January saw retail deposits increase, according to the Securities Times Network. Bank deposits increased by CNY1.6 trillion in January, as residents remain wary of the economic recovery, volatile stock prices, and a depressed real estate sector, the paper said. In order to convert savings into consumption, greater use of spending vouchers should be used to stimulate demand for consumer products and automobiles. Looser monetary conditions would increase the value of the stock market and boost confidence. Finally, increasing social security in the form of pensions, medical treatment and education is needed to reduce the high savings culture in China.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.