MNI China Daily Summary: Wednesday, October 31

     TOP NEWS: Chinese authorities are working on further measures to boost

lending from banks and insurers to private companies, including reserve ratio

requirement cuts, tax incentives, and reductions in collateral requirements, but

financial supervision standards will not be loosened, the China Banking and

Insurance Regulatory Commission said on Tuesday. "Tackling the financing

difficulties of small companies can't rely on relaxing criteria for lending,"

Wang Zhaoxing, vice chairman of the CBIRC, told a press conference in Beijing.

     LIQUIDITY: The People's Bank of China skipped open market operations for a

fourth trading day on Wednesday, leading to a liquidity drain of CNY150 billion

given the maturing of reverse repos, according to Wind Information. The central

bank said on its website that the increase in fiscal expenditure at month-end

should offset the impact of reverse repo maturities and other factors. The 7-day

weighted average interbank repo average rate for depository institutions (DR007)

increased to 2.7098% from Tuesday's close of 2.5295%, Wind Information said. The

overnight repo average increased to 2.3928% from Tuesday's 1.5398%.

     YUAN: The yuan depreciated to 6.9739 against the U.S. dollar from Tuesday's

close of 6.9613. The PBOC set the yuan central parity rate weaker for a second

day at 6.9646 from Tuesday's 6.9574. Today's fixing was the lowest since May 20,

2008.

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

3.5075%, down from the closing price of 3.5250% on Tuesday, according to Wind

Information.

     STOCKS: The benchmark Shanghai Composite Index closed 1.35% higher at

2,602.78. Hong Kong's Hang Seng Index increased 1.6% to 24,979.69.

     FROM THE PRESS: The Chinese economy has withstood external difficulties and

is moving towards high-quality development, the People's Daily said in a

commentary on Wednesday, downplaying sluggish Q3 economic data. China's economy

is operating in a reasonable range in terms of growth, employment, prices and

incomes, the newspaper said, citing Gao Lingyun, a researcher at the Chinese

Academy of Social Sciences. (Link to the story: https://bit.ly/2Oh2szs)

     China is still a hotspot for attracting foreign investment, the Economic

Daily said in a commentary published on Wednesday, dispelling rumours that some

investors have begun to withdraw foreign capital. More foreign funds are flowing

into high-tech manufacturing, the daily said. (Link to the story:

https://bit.ly/2ESX5XI)

     Two districts of the Beijing municipality have set up funds totalling CNY35

billion to provide local companies with liquidity amid the A-share stock market

rout, Beijing Daily reported. Xicheng district will launch a CNY10-billion fund

pledging against equities or convertible bonds. The capital injected through the

fund will not seek controlling rights of companies or interfere with their

operations, and will be withdrawn once the liquidity crisis is over, the daily

said. Chaoyang district will provide fund resources totalling CNY25 billion to

support corporate financing, especially for private enterprises in the cultural,

scientific and technology sectors, the newspaper said. (Link to the story:

https://bit.ly/2OWYUaF)

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

--MNI London Bureau; +44208-865-3829; email: Jason.Webb@marketnews.com

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