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TOP NEWS: China Securities Regulatory Commission(CSRC) will promote capital
market reforms, including vigorously enhancing equity and debt financing,
optimizing the merger and acquisition and restructuring system, as well as
launching the Science and Technology Innovation Board, said Yi Huiman, the new
chairman of CSRC in his first press conference in Beijing today. The main
purpose of setting the new trading board is to enhance support for the real
economy, Yi added.
POLICY: American businesses in China remain cautious ahead of a potential
trade deal between China and the U.S., seeing it as uncertain that Beijing will
move quickly to make structural economic changes demanded by Washington, the
president of the American Chamber of Commerce in China told MNI in an interview.
While President Donald Trump's decision to suspend a planned tariff increase on
Chinese imports was a relief to U.S. businesses in China, more difficult issues
remain unresolved, Alan Beebe said.
POLICY: A cash crunch for local government financing vehicles could prompt
further bond defaults by state-owned companies involved in local infrastructure
projects, a senior Moody's analyst told MNI Tuesday. "Defaults of LGFVs are due
to liquidity (constraints)," Kai Hu, a senior vice president at the ratings
firm, told MNI. Stricter regulations on non-standard credit assets have seen
investors pare holdings, leaving LGFVs struggling to find new avenues of
finance, Hu said.
LIQUIDITY: Late February saw a tightening of liquidity, with concerns
growing the People's Bank of China(PBOC) could further remove easy money and
market rates have already bottomed, the latest MNI China Interbank Liquidity
Survey showed. Almost half of respondents, 46.7%, saw a deterioration in
liquidity conditions over the month, compared to January when the survey was
unanimous in seeing conditions unchanged or better. "Tighter liquidity is mainly
due to tax payment cash demands for the month and the central bank has drained
liquidity for most days this month," one bank trader told MNI. Other traders
pointed to the sharp stock market rally in February as another reason for the
drain, as it had sucked up some excess liquidity.
LIQUIDITY: The PBOC injected CNY60 billion via 7-day reverse repos,
resulting in a net injection of CNY40 billion as CNY20 billion reverse repos
mature, according to Wind Information.
RATE: The 7-day weighted average interbank repo average rate for depository
institutions (DR007) decreased to 2.8000% from Tuesday's close of 2.8366%, Wind
Information showed. The overnight repo average decreased to 2.1000% from
YUAN: The yuan strengthened to 6.6835 against the U.S. dollar from
Tuesday's close of 6.6961. The PBOC set the dollar-yuan central parity rate at
6.6857, lower than the 6.6952 set yesterday.
BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.199%, down 1.3 bps from the close of Tuesday, according to brokers.
STOCKS: The benchmark Shanghai Composite Index rose 0.42% to 2,953.82. Hong
Kong's Hang Seng Index fell 0.05% to 28,757.44.
FROM THE PRESS: China's economy is expected to grow 6.4% in 2019 and
6.2%-6.5% in 2020, the Economic Information Daily said citing a forecast by
economists at Xiamen University. A sharp decline is unlikely as tax and fee cuts
underpin investment and overall growth, the daily said. Fixed-asset investment
growth may be 1.23 pp higher in 2019 at 7.25%, before slowing to 6.58% by 2020,
while retail sales this year may slow to 8.92% from 9.05%, the newspaper said
citing the economists.
The depreciation pressure on the yuan has eased due to the weakening dollar
index and China's strong balance of payments, Guan Tao, a senior fellow at the
China Finance 40 Forum, wrote in a report. A positive development in Sino-U.S.
trade negotiations and lower expectations for further rate hikes by the Federal
Reserve helped boost investors' optimism for the yuan, Guan said.
Over 70% Chinese bankers contacted in a survey by the China Banking
Association expected non-performing loans ratio (NPLs) to stay below 2.0% in the
coming three years, the China Securities Journal reported today. About 70%
respondents are concerned about growths in the coming years, expecting revenue
and profit growth rates to be less than 10%, the newspaper said. The banks are
more cautious about real estate lending given many cities implemented curbs on
property purchases and lending, the journal said.
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