MNI China Daily Summary: Wednesday, January 15
POLICY: China sees favourable conditions for trade in 2025 despite rising trade barriers, Meng Yue, head of the Department of Foreign Trade at the Ministry of Commerce said.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY959.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY958.4 billion after offsetting the maturity of CNY1.1 billion. There are another CNY995.0 billion 1Y MLF mature today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.2365% from 2.2972%, Wind Information showed. The overnight repo average decreased to 1.8623% from 1.9656%.
YUAN: The currency weakened to 7.3319 to the dollar from 7.3303 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 7.1883 on Wednesday, compared with 7.1878 set on Tuesday. The fixing was estimated at 7.3300 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.6400%, up from Tuesday's close of 1.6255%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged down 0.43% to 3,227.12, while the CSI300 index fell 0.64% to 3,796.03. The Hang Seng Index gained 0.34% at 19,286.07.
FROM THE PRESS: Authorities will introduce practical guidelines aimed at reforming the M&A and restructuring market, as well as implement policies to attract pension, insurance and financial management funds to the capital market, Shanghai Securities News reported, citing expectations from Tian Xuan, director at the National Institute of Financial Research at Tsinghua University. Fund industry reforms will likely include reducing fees and increasing investment products such as ETFs, Tian added.
China’s M2 money supply reached CNY313.5 trillion in December, up 7.3% y/y, driven by the migration of government deposits and wealth management funds to resident and corporate deposits, according to Mingming, chief economist at CITIC Securities. Looking ahead, new credit and social financing are expected to rise y/y as authorities adopt a moderately easing monetary policy and guide financial institutions to increase credit supply, said Wang Qing, chief macro analyst at Orient Securities. (Source: Securities Daily)
Authorities will focus on boosting consumption and domestic demand in 2025 to address low CPI and this year’s expected slowdown in exports, according to Sheng Songcheng, professor of economics and finance at the China Europe International Business School. Sheng said authorities may increase the general public budget deficit rate 4% and expand the scale of the old-for-new subsidy scheme. Based on current trends, Sheng anticipated the decline in the real-estate sector will further narrow this year before stabilising in 2026.