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(U1) Holding Onto Gains

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(U1) Needle Points North

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(U1) Bullish Tone Remains Intact

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Risk Appetite Ebbs In Asia

     EXCLUSIVE: The coronavirus outbreak may shave China's Q1 growth by as much
as a full percentage point from last quarter to 5% as knock-on effects in the
crucial services industry are amplified, clouding the outlook for full-year
2020, according to advisors close to the government interviewed by MNI. "Growth
could register 5.6% to 5.7% (this year) if the situation is contained this month
and contingency policies are enforced effectively and in a timely fashion. If
not, GDP could drop below 5.5%," said Zhang Ming, a senior fellow at the
Institute of World Economic and Politics under the Chinese Academy of Social
Sciences.
     DATA: The Caixin China services PMI fell to 51.8 in January from 52.5 the
previous month, the lowest since November 2019. New orders sub-index eased to
three-month low due to slowing domestic demand while new export orders
accelerated on strengthened overseas demand. The official PMI for the services
sector released Jan. 31 rose 0.1 to 53.1.
     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations
on Wednesday, draining CNY30 billion after the maturity of reverse repos,
according to Wind Information. Current liquidity can meet demand, PBOC said on
its website.
     RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) decreased to 2.2952% from Tuesday's close 2.4094%, Wind
Information showed. Overnight repo average fell to 1.9454% from 2.2243%
yesterday.
     YUAN: The yuan weakened to 6.9997 against the dollar from Tuesday's close
6.9900. PBOC raised the dollar-yuan central parity rate to 6.9823 from 6.9779 on
Tuesday, the highest since Dec. 27, 2019.
     BONDS: The yield on 10-year China Government Bonds was last at 2.8700%,
unchanged from Tuesday's close, according to Wind Information.
     STOCKS: The Shanghai Composite Index rallied 1.25% to 2,818.09 following
the PBOC's large liquidity injection yesterday. Hong Kong's Hang Seng Index
gained 0.42% to 26,786.74.
     FROM THE PRESS: China should use local government special-purpose bonds and
offer credit through policy banks to increase infrastructure investment and ease
economic turbulence resulting from the coronavirus outbreak, the China
Securities Journal said in a front-page commentary. Still, Q1 growth accounts
for the smallest portion of the full-year GDP expansion, the newspaper said.
     Investment in networking infrastructure and services in China may exceed
CNY5 trillion this year including further expansion of 5G networks and other
high-tech communications, on growing need for emergency response and remote
working and education following the coronavirus epidemic, the Securities Daily
reported citing Tang Chuan, an analyst at the China Public Private Partnerships
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
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]