MNI China Daily Summary: Wednesday, November 27
EXCLUSIVE: Traders expect the People’s Bank of China (PBOC) to buy bonds and cut banks’ reserve requirements to offset rising liquidity demand at year end, but chances of a rate cut are slim next month, MNI’s China Money Market Index indicates.
EXCLUSIVE: Beijing will need to provide the housing market with additional policy measures to ensure the recent recovery's sustainability, including a further CNY2 trillion to support the government’s urban village renewal scheme and the purchase of unsold homes and idle land, advisors and analysts told MNI.
DATA: Corporate profits in China fell 10.0% y/y in October, narrowing from the 27.1% drop in September, National Bureau of Statistics data showed.
LIQUIDITY: The PBOC conducted CNY268.3 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY33.8 billion after offsetting the maturity of CNY302.1 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.7169% from 1.7481%, Wind Information showed. The overnight repo average decreased to 1.3644% from 1.4280%.
YUAN: The currency strengthened to 7.2487 to the dollar from the previous 7.2578. The PBOC set the dollar-yuan central parity rate higher at 7.1982, compared with 7.1910 set on Tuesday. The fixing was estimated at 7.2540 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.0490%, down from the previous close of 2.0525%, according to Wind Information.
STOCKS: The Shanghai Composite Index rallied 1.53% to 3,309.78, while the CSI300 index rose 1.74% to 3,907.04. The Hang Seng Index increased 2.32% at 19,603.13.
FROM THE PRESS: Insurance funds should continue supporting major national strategies and increase investment in strategic emerging industries, advanced manufacturing, and tech-based infrastructure, China Securities Journal reported citing Li Yunze, director at the National Financial Regulatory Administration. Industry insiders expect relaxation in regulations on using insurance funds and an improvement to assessment mechanisms to encourage long-term investment, the newspaper said.
China saw 12.8 million newly-established tax-related business entities during the first three quarters of the year, up 4% y/y, slower than the 28.3% y/y seen during the same period last year, data from the State Administration of Taxation showed. The results demonstrated continuous improvement in business confidence but increased operating pressure and high-base effects had caused the deceleration. (Source: Yicai)
Agricultural trade can be the foundation of China U.S. economic relations going forwards, given the complimentary nature of Beijing’s huge consumer market and Washington’s large export volume, according to Zheng Yi, chairman of the Shanghai American Chamber of Commerce, speaking at a recent forum. Wang Zhan, chairman of the Shanghai Federation of Social Sciences, said Shanghai has a diplomatic role between the two nations as the top destination for foreign-funded enterprises, and can work to strengthen commercial and people exchanges to reduce the impact of changing U.S. policy. (Source: Yicai)