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Free AccessMNI China Daily Summary: Wednesday, November 10
DATA: China's producer price index measuring factory gate prices jumped13.5% y/y in October amid tighter supply of domestic energy and raw materials, accelerating from September's 10.7% gain, hitting the highest level since June 1995 and outshining a forecast of 12.4%, according to the National Bureau of Statistics. Consumer price index quickened to 1.5% y/y from 0.7% in September, the highest since September 2020, above the forecast 1.4%.
DATA: China's M2 money supply growth rebounded to 8.7% y/y in October from September's 8.3%, rising to the highest since March, data released by the People's Bank of China on Wednesday showed, outpacing the median forecast of 8.3%. Among the key metrics, M1 growth slowed to 2.8% y/y from the previous 3.7% gain.
LIQUIDITY: The PBOC injected CNY100 billion via 7-day reverse repos with the rates unchanged at 2.2%. The operation led to a net injection of CNY50 billion after offsetting the maturity of CNY50 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 2.1051% from the close of 2.1819% on Thursday, Wind Information showed. The overnight repo average decreased to 1.8319% from the previous 2.1279%.
YUAN: The currency strengthened to 6.3915 against the dollar from 6.3950 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 6.3948, compared with the 6.3903 set on Tuesday.
BONDS: The yield on the 10-year China Government Bond was last at 2.9275%, up from Thursday's close of 2.9200%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged down 0.41% at 3,492.46, while the CSI300 index lost 0.53% to 4,821.19. Hang Seng Index gained 0.74% to 24,996.14.
FROM THE PRESS: The PBOC's new lending tool formulated to boost bank lending to carbon reduction efforts may lead to as much as CNY3 trillion additional green loans next year, and help boost overall social financing, the 21st Century Business Herald reported citing Dai Zhifeng, research head of Zhongtai Securities. The central bank didn't set a fixed scale, which left open the upper limit, the newspaper said. As intended, the PBOC will provide 60% of the principal while commercial banks provide the remaining 40% when lending to green projects, an arrangement that both utilizes banks' capital and encourages prudence, the newspaper said citing Zeng Gang, deputy director of the National Institution for Finance & Development.
The PBOC is likely to continue raising the scale of reverse repurchase agreements through the yearend to meet rising demand, extending the steady increase seen this month, the Economic Information Daily reported citing analysts. The central bank on Tuesday conducted CNY100 billion RR via open market operations, increasing from earlier daily scales such as CNY10 billion and CNY50 billion. The issuances of local government bonds are expected to cap this month, which will increase liquidity demand, while CNY1 trillion MLFs are also set to mature, the newspaper said. Policymakers will likely resist the use of cutting banks' reserve ratios and rates as they balance short and long-term economic goals, the newspaper said citing analyst Wang Yifeng of Everbright Securities. China will likely maintain prudent monetary policies next year and facilitate structural changes such as increased lending to SMEs and green industries, as well as staying on guard for changes in U.S. asset rates of returns and global capital movement, the newspaper said.
Foreign investors, including Goldman Sachs, are buying Chinese developers' dollar bonds at low prices at a time when frequent defaults on these bonds by cash-strapped developers caused widespread panic, the PBOC-run newspaper Financial News reported. The prices on some developers' dollar bonds have rebounded after they bought back some to shore up confidence, the newspaper said. The financing conditions of developers have mostly normalized with real estate loans surging in October by as much as CNY200 billion from September, the newspaper said.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.