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POLICY: China has pre-allocated CNY1 trillion of next year's
special-purpose bond quotas to local governments, the Ministry of Finance said
on its website Wednesday, confirming what has largely been known to the market.
Local governments should now ensure that these bonds have an impact boosting the
economy as 2020 gets underway, the ministry said.
LIQUIDITY: Liquidity conditions improved markedly in November as the
People's Bank of China (PBOC) moved to help a slowing economy, the latest MNI
China Liquidity Survey showed. MNI's Liquidity Conditions Index fell sharply in
November, dropping to 12.5 from 66.7 in October, with 83.3% of the respondents
reporting an improved situation. It was the lowest reading since June and the
second lowest this year. The higher the index reading, the tighter liquidity
appears to market participants.
DATA: Total profits made by China's largest industrial companies in October
fell 9.9% y/y, steeper than 5.3% drop in September, due to the declining
ex-factory prices of industrial products and slowing sales, according to a
statement by the National Bureau of Statistics (NBS) on Wednesday. It was the
steepest drop since 14.0% reduction recorded in January and February, NBS data
LIQUIDITY: The PBOC skipped open market operations for the sixth day,
leaving liquidity unchanged as no reverse repos are due today, according to Wind
Information. The total liquidity in the banking system is reasonable and ample,
the PBOC said.
RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) decreased to 2.5081% from Tuesday's close 2.5595%, Wind
Information showed. The overnight repo average fell to 2.2229% from 2.3078%
YUAN: The yuan strengthened to 7.0260 against the dollar from Tuesday's
close 7.0363. PBOC set the dollar-yuan central parity rate higher at 7.0349,
compared with Tuesday's 7.0344.
BONDS: The yield on 10-year China Government Bonds was last at 3.1775%, up
from Tuesday's close of 3.1750%, according to Wind Information.
STOCKS: The Shanghai Composite Index trimmed 0.13% to 2,903.19, with home
appliance shares leading the drop. Hong Kong's Hang Seng Index increased 0.12%
FROM THE PRESS: The PBOC may not conduct OMO until December, China
Securities Journal reported citing analysts. Liquidity will continue to be
adequate given increased fiscal spending expected , the newspaper said.
More medium and small banks in China are expected to issue perpetual bonds
as the central bank pushes them to recapitalize, the Shanghai Securities News
reported. Two regional banks - Huishang Bank and Taizhou Bank - have been
approved to issue bonds to replenish capital, the newspaper said.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: firstname.lastname@example.org
--MNI Beijing Bureau; +86 10 8532 5998; email: email@example.com