MNI China Daily Summary: Wednesday, November 16

POLICY: China’s economic growth is expected to accelerate, though a sustained recovery in Q4 will require "arduous efforts" to offset disruptions from renewed Covid outbreaks, said Meng Wei, spokeswoman for the National Development and Reform Commission at a briefing.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY71 billion via 7-day reverse repos with the rates unchanged at 2.00%. The operation led to a net injection of CNY63 billion after offsetting the maturity of CNY8 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) rose to 2.0150% from the close of 1.9429% on Tuesday, Wind Information showed. The overnight repo average increased to 1.9386% from the previous 1.8493%.

YUAN: The currency weakened to 7.0809 against the dollar from 7.0335 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 7.0363, compared with 7.0421 set on Tuesday.

BONDS: The yield on the 10-year China Government Bond was last at 2.8350%, up from Tuesday's close of 2.8150%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.45% at 3,119.98, while the CSI300 index fell 0.82% to 3,834.39. The Hang Seng Index lost 0.47% to 18,256.48.

FROM THE PRESS: Market analysts are divided on outlook for further cuts to the reserve requirement ratio and interest rates, with some analysts seeing the possibility of a RRR cut in December or January, Shanghai Securities News reported. Some analysts argue low-cost funds should be provided to banks through RRR cuts as they face narrowing interest margins as home loans will need to be re-priced early next year following a total 35bp cut to the 5-year Loan Prime Rate this year, the newspaper said citing Postal Savings Bank researcher Lou Feipeng. Other analysts said the central bank will be wary of easing as high U.S. inflation is unlikely to change significantly, the newspaper said.

The benchmark 5-year Loan Prime Rate, which lenders based their mortgage rates on, is expected to be lowered this year as policymakers aim for a soft landing in the real estate sector to help stabilise growth and control financial risks, Securities Times reported citing Wang Qing, chief analyst at Golden Credit Rating. Though the central bank maintained its rate on the medium-term lending facility - an anchor to LPR - in November, the LPR is likely to head lower this year to accelerate credit expansion. The top priority for credit policy is to increase lending to the property sector and stabilise investment in infrastructure and manufacturing, the newspaper said citing analysts.

Recent policies to improve property developers’ financing environment cannot be considered as a rescue for the industry, as these measures aim to provide liquidity relief rather than prevent a balance sheet recession, Yicai.com said in an editorial. It is necessary to adhere to the idea that “housing is for living not speculation”, avoid misunderstanding of favorable policies, and guide investors to prepare for corresponding risks, the newspaper said.