MNI China Daily Summary: Wednesday, Nov 22

POLICY: China must ensure the reduction of energy use among petrochemical and non-ferrous industries takes precedence over lowering total consumption, according to Miao Wei, former head at the Ministry of Industry and Information Technology (MIIT).

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY460 billion via 7-day reverse repo, with the rate unchanged at 1.80%. The operation has led to a net drain of CNY35 billion after offsetting the maturity of CNY495 billion reverse repos today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.0378% from 2.0213%, Wind Information showed. The overnight repo average increased to 1.9011% from 1.8880%.

YUAN: The currency weakened to 7.1477 to the dollar from 7.1338 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 7.1254, compared with 7.1406 set on Tuesday. The fixing was estimated at 7.1432 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.7000%, up from Tuesday's close of 2.6925%, according to Wind Information.

STOCKS: The Shanghai Composite Index fell 0.79% to 3,043.61 while the CSI300 index decreased 1.02% to 3,544.42. The Hang Seng Index closed flat at 17,734.60.

FROM THE PRESS: The market should brace for further yuan appreciation, with more short squeezes expected especially over the typical November to January settlement period, Yicai.com reported citing analysts. The yuan is likely to fluctuate within the range of 7.15 to 7.17 against the U.S. dollar in the next few days, said Zhou Hao, chief economist at Guotai Junan Securities. Short squeezes driven by the improvement in China-U.S. relations and expectation of the end of rate hike is driving the recent yuan rebound, though the sustainability is unclear. The yuan has appreciated by nearly 2,000 points in two weeks.

Sunac China has become the first large-scale real-estate company to complete domestic and overseas debt restructuring, and secure CNY3.48 billion in cooperative financing from the government-backed asset manager Huarong, the Securities Daily reported. The company has resolved CNY90 billion in debt, and reduced it by USD4.5 billion. It will have no debt repayment pressure in the overseas public market within two-three years, while the company still needs to stabilise operating cash flow and use unrestricted funds to ensure the delivery of housing projects to avoid further deterioration of brand credit, said Yan Yuejin, director at the E-house China Research and Development Institution.

China exported 4.24 million automobiles from January to October this year, up 58% y/y with the average export price rising to USD20,000 from USD18,000 in 2022, according to Cui Dongshu, secretary-general at the Passenger Car Association. Cui expects car exports to remain strong in Q4 reflecting the competitiveness of China's automobile industry. Chinese manufacturers have also benefited from increased demand from Russia following the Russia-Ukraine crisis. Cui also noted that the car export market has recovered stronger than the domestic market this year. (Source: Yicai)