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Reporting on key macro data at the time of release.
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EXCLUSIVE: China is dialing back implicit, or off-book, municipal debt using tools that advisors tell MNI should give investors more confidence even as a squeeze on new issuance raises concerns of repayment risks from some local government financing vehicles. Stock exchanges in China are tightening new bond issuance policies for LGFVs to gradually lower their leverage overall and nibble at an estimated CNY40 trillion of implicit municipal off-balance-sheet debts, including non-standard financing not linked to bonds.
DATA: Caixin China's manufacturing PMI for November declined 0.7 points on month to 49.9, falling back to the contraction zone below the breakeven 50, indicating a slower recovery of the manufacturing sector, the financial publisher Caixin said on Wednesday. The manufacturing industry in November saw recovered supply as a power crunch eased but weak demand.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with the rates unchanged at 2.2%. The operation has led to a net drain of CNY90 billion after offsetting the maturity of CNY100 billion 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 2.0914% from the close of 2.3950% on Thursday, Wind Information showed. The overnight repo average decreased to 1.9999% from the previous 2.1764%.
YUAN: The currency weakened to 6.3705 against the dollar from 6.3701 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 6.3693, compared with 6.3794 set on Tuesday.
BONDS: The yield on the 10-year China Government Bond was last at 2.8900%, up from Thursday's close of 2.8750%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged up 0.36% at 3,576.89, while the CSI300 index rose 0.24% to 4,843.85. Hang Seng Index gained 0.78% to 23,658.92.
FROM THE PRESS: China is likely to exceed the targeted economic growth as it continues to recover with employment, inflation and international balance of payments stable, Vice Premier Liu He said in a video speech on Tuesday at the Hamburg Summit, according to a Xinhua News Agency report. China's growth target this year was set at 6% in March. China promises to further improve its business environment next year, ease market access and promote fair competition, Liu said. China will maintain the continuity, stability and sustainability of its macro policy, and support private and small companies, Liu said. China is fully confident in its economy next year, said Liu.
China's housing sales may gradually pick up in March 2022 after prices plunged in Q4, Yicai.com reported citing CITIC Securities. Marginal easing of purchase rules and incentives by some local authorities failed to significantly improve the housing market downturn, the newspaper said. In November, the sales of the top 100 developers totaled CNY845.03 billion, a sharp drop of nearly 40% y/y, the newspaper said citing data by CRIC China. China may not significantly relax housing policy nor further tighten, given the central government's stance against speculating on houses, the newspaper said citing insiders.
China should maintain a core area to supply key natural resources such as lithium and nickel and create a reliable system of reserves and delivery to sustain its industrialization and shift toward an electricity-powered economy, the Economic Daily said in its front-page editorial. The global supply of these minerals may be difficult to match the surging demand for cleantech, and the supplying regions are also highly concentrated, said the official newspaper. The security of mineral supply has been elevated to a national-level strategy at the recently convened Politburo meeting, said the commentary under the pseudonym of Jin Guanping. The background of the issue was due to the global shift to clean energy, boosting demand for lithium, nickel, cobalt and molybdenum, while the electrification raised the demand for copper, said the newspaper.