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Mar22 SONIA Call Condor Buyer

MNI (London)

REALITY CHECK: China's consumer prices may accelerate only modestly in September, as continuing declines of pork prices weigh on the wider index despite service prices seeing limited upticks following an easing of sporadic outbreaks of Covid-19 cases, industry leaders and analysts told MNI. "CPI may rise 0.8% y/y, flat from August's 0.8% growth," said Wang Jingwen, a senior researcher at the Pangoal Institution. On a monthly basis, CPI could rise 0.2%, compared to the previous 0.1% reading, Wang added.

DATA: China's M2 money supply growth rebounded to 8.3% y/y in September from August's 8.2%, data released by the People's Bank of China showed, outpacing the median forecast of 8.2%. Aggregate financing was CNY2.9 trillion, little changed from CNY2.96 trillion in August, underperforming the median forecast of CNY3.05 trillion. New loans rose to CNY1.66 trillion from CNY1.22 trillion, also lower than the median forecast of CNY1.81 trillion.

DATA: China's exports in September jumped 28.1% y/y to USD305.74 billion, boosted by recovering overseas demand and strong sales of electronic and labor-intensive products, data from China General Administration of Customs showed. Imports, on the other hand, slowed to 17.6% y/y growth at USD238.98 billion in September, partly due to the fast-rising commodity prices.

LIQUIDITY: The PBOC injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.2% on Wednesday. The operations lead to a net drain of CNY90 billion after offsetting the maturity of CNY100 billion reverse repos today, according to Wind Information. The operation aims to keep the liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 2.1977% from the close of 2.1592% on Thursday, Wind Information showed. The overnight repo average increased to 2.1436% from the previous 2.1063%.

YUAN: The currency strengthened to 6.4452 against the dollar from 6.4565 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 6.4612, compared with the 6.4447 set on Tuesday.

BONDS: The yield on the 10-year China Government Bond was last at 2.9525%, down from Thursday's close of 2.9600%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.42% at 3,561.76, while the CSI300 index rose 1.15% to 4,940.11. The Hong Kong stock market closed on Typhoon Kompasu.

FROM THE PRESS: China will focus on stabilizing industrial production, expanding investment and promoting consumption to boost Q4 growth, as local authorities try to meet annual economic targets and counter downward pressure, the Economic Information Daily reported. With the epidemic eased, consumer spending during the October holiday improved from previous holidays, and exports may hold up as the global supply chain recovers, which will in turn stabilize industrial and manufacturing investment, the newspaper said citing Lin Zhiyuan, deputy director of Macroeconomic Research Center at Xiamen University. The accelerating issuance of local government special bonds will help boost infrastructure investment, Lin added.

China is likely to ease its "strictest and severest policies" on the property industry and instead seek to stabilize expectations, said citing industry watchers. The authorities are likely to modify credit lending policies to developers and mortgage borrowers, Yicai said citing Bank of China Securities. Yicai commented following reports that the north-eastern city Harbin introduced bonuses and other incentives to entice buyers as the local authorities struggled to arrest a sinking market. Lenders in other cities including Guangzhou and Foshan also cut mortgage rates for first and second-time buyers, Yicai said.

China's energy shortage may not lead to significant resumption in trade with Australia, the Global Times said in an editorial. The state-owned tabloid commented following western media reports that about 1 million tons of Australian coal were allowed to clear customs at Chinese ports, opening an opportunity for easing coal-focus trade dispute between the two countries. Without denying the reports, the newspaper said coal imports are not a major factor in China's energy supply and demand relationship, as the Asian country has ordered more coal-producing provinces to boost output. China significantly boosted imports from the U.S., South Africa and Canada in the first eight months, said the newspaper.

MNI London Bureau | +44 203-586-2225 |