MNI China Daily Summary: Wednesday, October 23
EXCLUSIVE: Chinese steel prices in Q4 are expected to increase 10% q/q on average as manufacturing demand picks up and despite recent disappointing stimulus measures, but further data and more certainty on fiscal support is needed to ensure a sustainable rebound, local analysts told MNI.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY792.7 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY150.3 billion after offsetting the maturity of CNY642.4 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.6412% from 1.6362%, Wind Information showed. The overnight repo average decreased to 1.4985% from 1.4987%.
YUAN: The currency weakened to 7.1268 to the dollar from the previous 7.1212. The PBOC set the dollar-yuan central parity rate higher at 7.1245, compared with 7.1223 set on Tuesday. The fixing was estimated at 7.1242 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.1150%, up from the previous close of 2.1100%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged up 0.52% to 3,302.80, while the CSI300 index rose 0.39% to 3,973.21. The Hang Seng Index increased 1.27% at 20,760.15.
FROM THE PRESS: China’s top state planner will continue to launch additional policies such as expanding usage of local special bonds to the widest extent possible and raising student subsidies and loans, CCTV News reported. The National Development and Reform Commission said the country will continue issuing ultra-long-term special treasuries to support major national strategies and security. The Commission will also accelerate measures to encourage foreign investment and build a unified national market.
Chinese sellers are branding this year’s Double-Eleven shopping festival, held each year on November 11, on the theme of national subsidies as merchants look to entice sales using the government’s trade-in scheme, Yicai has reported. Industry insiders noted brands and outlets were making strong efforts to highlight the advantages to consumers, given a recent survey showed only 25% of buyers were aware of the benefits, and the possibility the subsidies may be discontinued next year.
Overseas institutions held CNY4.4 trillion of debt in the interbank bond market by end-September, marking the 13th consecutive monthly increase, Shanghai Securities News reported, citing data by People's Bank of China Shanghai Head Office. Foreign investors’ holdings of yuan assets, including stocks, are expected to rise further, with the yuan’s stability and relatively independent returns helping global investors to diversify and spread risk, the newspaper said, citing Li Hongyan, deputy director at the State Administration of Foreign Exchange.