MNI China Daily Summary: Wednesday, October 17

     TOP NEWS: Total social financing (TSF), a broad measure of credit and

liquidity in the economy, rose to an eight-month high of CNY2.21 trillion in

September, much higher than the MNI median projection of CNY1.38 trillion and up

from CNY1.52 trillion in August. The sharp increase is mainly due to a change in

calculation method - as of September, local government bonds are to be included

in the TSF calculation.

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations

(OMOs) on Wednesday, leaving liquidity unchanged. No reverse repos mature today,

according to Wind Information. The central bank said the level of liquidity in

the banking system is "relatively high", enough to offset the impact from

government bond issuance and other factors. The 7-day weighted average interbank

repo average rate for depository institutions (DR007) increased to 2.5862% from

Tuesday's close of 2.5805%, Wind Information showed. The overnight repo average

decreased to 2.3294% from Tuesday's 2.3501%.

     YUAN: The yuan depreciated to 6.9280 against the U.S. dollar from Tuesday's

close of 6.9186. The PBOC set the yuan central parity rate stronger for a second

day at 6.9103, compared with 6.9119 on Tuesday.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.5725%, up from the closing price of 3.572% on Tuesday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 0.6% higher at

2,561.61. Hong Kong's Hang Seng Index increased 0.07% to 25462.26.

     FROM THE PRESS: Chinese state-owned companies (SOEs) bought shares of

private companies amid stock market turbulence this month to help them ease

liquidity pressure and survive the crisis, rather than bottom fishing and

opportunistic takeover, the Securities Daily said in a front-page opinion piece

on Wednesday. SOEs in more than 10 provinces have bought A-shares amid the

sell-off, according to the Daily. (Link to story: https://tinyurl.com/ybeqf62h)

     More local governments are planning to inject capital into the tumbling

stock market, following Shenzhen municipal government's purchases of tens of

billions of A shares, Caixin reported. The government of Shunde city in

Guangdong province is planning to ease the risk of equity pledge of its own

listed companies. Shunde plans to arrange special funds to improve the liquidity

of listed firms, mainly by providing financing support and acquisition of shares

or debt, Caixin said.(Link to story: https://tinyurl.com/ycsaaow7)

     Boosting investor confidence in the A-share stock market comes from

recognizing how reform and opening up of the Chinese economy helps the capital

markets' healthy development, Economic Daily said in a commentary on Tuesday,

calling for the reform of the Initial Public Offering (IPO) process, the release

of financial licenses, and the improvement of the infrastructure. The current

overall valuation of 'A' shares is reasonable, and some industries and companies

have good development prospects, the daily said. Investors should not see fear

within the P/E ratio and turnover numbers, but trust the resilience and

investment opportunities of the stock market, the daily said. (Link to story:

https://tinyurl.com/ydcqab5e)

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]