MNI China Daily Summary: Wednesday, November 2

EXCLUSIVE: Beijing will accelerate efforts to join the Trans-Pacific trade bloc and a regional digital agreement, as China’s new leadership team seeks to deliver on its ambitious plans to increase high-quality exports, said a former adviser to China's State Council.

POLICY: The People's Bank of China (PBOC) Governor Yi Gang backed the role of markets in determining the value of the Chinese yuan and flagged ongoing support for the ailing property sector in a speech in Hong Kong. Yi said the yuan would remain stable at a reasonable level and follow market conditions after the CNY weakened to 7.32 against the U.S. dollar - the lowest since 2008 - on November 1. “We continue to insist on market mechanisms playing a decisive role in forming exchange rates,” Yi said.

POLICY: China’s banking regulator is concerned about the property sector but is confident the exposure of its banks is low, said Xiao Yuanqi, Vice Chairman of the China Banking and Insurance Regulatory Commission. Exposure to property accounts for 26% of banking sector loans and is mainly home mortgage loans, which are of high quality and have a rate of default of around 0.1%, Xiao said, speaking at an event in Hong Kong.

POLICY: Hong Kong will continue lifting Covid restrictions and increase efforts to attract top talent to cement its role as a regional hub, Hong Kong SAR Chief Executive John Lee said.

LIQUIDITY: The PBOC injected CNY18 billion via 7-day reverse repos with the rates unchanged at 2.00%. The operation led to a net drain of CNY262 billion after offsetting the maturity of CNY280 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 1.7104% from the close of 1.7373% on Tuesday, Wind Information showed. The overnight repo average decreased to 1.7244% from the previous 1.8199%.

YUAN: The currency weakened to 7.2825 against the dollar from 7.2719 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 7.2197, compared with 7.2081 set on Tuesday.

BONDS: The yield on the 10-year China Government Bond was last at 2.6850%, up from Tuesday's close of 2.6650%, according to Wind Information.

STOCKS: The Shanghai Composite Index gained 1.15% at 3,003.37, while the CSI300 index rose 1.20% to 3,677.81. The Hang Seng Index rallied 2.41% to 15,827.17.

FROM THE PRESS: China’s new yuan loans and aggregate finance may see a seasonal decline in October after banks accelerated lending at the end of Q3 to meet regulatory requirement, thereby satisfying some of October's demand, the Securities Daily reported citing Wang Qing, chief analyst at Golden Credit Rating. Wang estimated new loans will reach CNY930 billion, compared to September’s CNY2.47 trillion, while aggregate finance may slow to CNY1.4 trillion from the previous CNY3.53 trillion, the newspaper said. New loan growth will continue to be supported by increased medium- and long-term corporate bonds amid government support for infrastructure and manufacturing investment, but weak spending remains a drag on mortgage and consumer loans, Wang was cited as saying. The central bank is set to release the latest financing data between November 11-15.

The PBOC‘s Pledged Supplemental Lending (PSL) facility increased a net CNY154.3 billion in October, accelerating from September’s CNY108.2 billion, the 21st Century Business Herald reported. PSLs were provided to three policy banks to help boost lending in targeted areas, with the PBOC providing funds equal to 100% of the loan principal, the newspaper said. Some analysts believe the PSL was used to help property developers deliver unfinished projects or to fund infrastructure construction of underground pipeline and water conservation projects, the newspaper said.

Several private property developers including Longfor and Country Garden are promoting their second round of bond issuance with credit enhancement by China Bond Insurance Co Ltd, sending a positive signal about the stability of bond financing channels for private developers, the Securities Times reported. China Bond Insurance has promoted more than 10 credit enhancement to help developers raise CNY8.37 billion in bond sales, driving a total of CNY15.5 billion of debt financing, the newspaper said. This should encourage commercial banks and other financial institutions to restore loans and investments in private developers, the newspaper said.