MNI China Daily Summary: Friday, October 8

LIQUIDITY: The PBOC injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.20% on Friday. The operations lead to a net drain of CNY330 billion after offsetting the maturity of CNY340 billion reverse repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.1278% from the close of 2.2743% on Thursday, Wind Information showed. The overnight repo average rose to 2.0891% from the previous 2.0852%.

YUAN: The currency strengthened to 6.4491 against the dollar from 6.4626 last Thursday. The PBOC set the dollar-yuan central parity rate lower at 6.4604, compared with the 6.4864 set on Thursday.

BONDS: The yield on the 10-year China Government Bond was last at 2.9075%, up from Thursday's close of 2.8750%, according to Wind Information.

STOCKS: The Shanghai Composite Index closed up 0.67% at 3,592.17, while the CSI300 index rose 1.31% to 4,929.94. Hang Seng Index rose 0.55% to 24,837.85.

FROM THE PRESS: China will remain focused on deflating the real estate bubble and reducing risks, and won't change the pace of economic adjustment in order to quell markets, the Global Times said in an editorial. The state-owned tabloid responded to speculation that the widening debt crisis faced by Evergrande, Group, the country's biggest developer, may push the Chinese economy into a "Lehman Brothers" moment. Evergrande's fate remains uncertain as it has been trying to raise funds to resolve its liquidity crisis, the newspaper said. Evergrande's challenges were due to its high leverage and credit bubbles, a shared phenomenon among Chinese developers, said the newspaper. However, the group's recent failure to pay overdue bills is a troubling sign for the entire property industry, which may spread contagion risks to upstream and downstream, said the newspaper.

China's foreign exchange reserves fell by 0.97% through the end of September from a month ago to $3.2 trillion, as the rising dollar index led to falling prices of financial assets of "major countries," the Securities Times said citing Wang Chunying, the spokeswoman of the State Administration of Foreign Exchange. China's "resilient" growth will keep the forex reserves stable, but it needs to further boost internal demand and balance risks amid challenges from the global pandemic to changes in the U.S. monetary policy, the newspaper said citing analyst Wen Bin of Minsheng Bank.

China's banks and financial institutions should try to meet the reasonable financing needs of coal, steel, non-ferrous metals companies, and boost support for major coal-producing areas and key coal producers to increase the supply of electricity and coal through the winter, the China Securities Journal said citing the China Banking and Insurance Regulatory Commission. The regulator urged institutions to keep the normal order of the coal power industry and the commodities markets, the journal reported.