MNI China Daily Summary: Wednesday, Nov 6
EXCLUSIVE: Beijing will likely issue CNY1 trillion in special treasuries to help replenish capital of China's six largest state-owned banks, aiming to raise their core tier-1 capital by 1 percentage point on average, which will increase their propensity to lend,boost the economy and help manage financial risks over the coming years, advisors and economists told MNI.
POLICY: China’s Retail Prosperity Index reached 51.0 in November, down from 51.4 in October, but remaining above the expansion mark of 50.0 for the third consecutive month, the China General Chamber of Commerce said.
POLICY: Project mBridge will continue development of the multi-central bank digital currency payment system despite the departure of the Bank for International Settlements, according to a statement made by the group's steering committee.
LIQUIDITY: The PBOC conducted CNY17.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY413.7 billion after offsetting the maturity of CNY431 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.5525% from 1.5425%, Wind Information showed. The overnight repo average decreased to 1.3343% from 1.3410%.
YUAN: The currency weakened to 7.1649 to the dollar from the previous 7.1095. The PBOC set the dollar-yuan central parity rate lower at 7.0993, compared with 7.1016 set on Tuesday.
BONDS: The yield on 10-year China Government Bonds was last at 2.1022%, down from the previous close of 2.1083%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged down 0.09% to 3,383.81, while the CSI300 index fell 0.50% to 4,024.28. The Hang Seng Index lost 2.23% at 20,538.38.
FROM THE PRESS: Yicai news agency's China Chief Economist Index reached 50.78 in November, up from 50.62 previously and above the expansion mark of 50 for the second consecutive month, the news agency said. Economists surveyed expect October's CPI to hit 0.417% y/y with PPI declines narrowing to 2.42% from 2.8% in September. Retail sales are forecasted to increase 4.1% versus September’s 3.2%, while industrial value added was anticipated at 5.33% growth y/y, down from 5.4% previous. Economists noted the equipment renewal cycle will slow down in 2025 and presents a downside risk to manufacturing investment in H2.
The People’s Bank of China Governor Pan Gongsheng pledged to increase the intensity of countercyclical adjustments and keep monetary policy accommodative to support the country’s economic growth, Xinhua News Agency reported. In a financial work report to the National People’s Congress Standing Committee, Pan said the central bank will strengthen financial supervision, deepen financial reform and opening up, and prevent financial risks.
Several cities including Zhengzhou and Yinchuan have offered housing vouchers to resettle residents as part of urban-village renovation plans, Securities Times reported. Beneficiaries can use the vouchers to purchase all housing projects in Zhengzhou city, where some sales centers are reportedly crowded with several displaying “sold out” signs, the newspaper said. The nationwide monetised renovation programme will release demand equivalent to nearly 20% of the annual sales volume of new houses in the short term, Chen Cong, analyst at CITIC Securities, anticipated.