MNI China Daily Summary: Wednesday, September 27

LIQUIDITY: China’s interbank market liquidity tightened in September, even as the PBOC kept sufficient liquidity in the system to support the economy going into Q4 by making cuts to the reserve requirement ratio (RRR) and adjustments to its daily open market operations, the latest MNI Liquidity Survey, published late Tuesday, showed. Traders' views on the economy rebounded strongly, ending a 5-month run of declines, with respondents encouraged by rebounding production and consumption data. The MNI China Liquidity Condition Index climbed to 52.6 in September from August’s 44.9, with 25.6% of traders reporting tighter conditions towards the end of Q3.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY200mbilion via 7-day reverse repo and CNY417 billion via 14-day reverse repo, with the rate unchanged at 1.80% and 1.95%, respectively. The operation has led to a net injection of CNY412 billion after offsetting the maturity of CNY205 billion reverse repos today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.9513% from the close of 2.2019% on Tuesday, Wind Information showed. The overnight repo average fell to 1.6957% from the previous 1.7495%.

YUAN: The currency weakened to 7.3088 against the dollar from 7.3019 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 7.1717, compared with 7.1727 on Tuesday. The fixing was estimated at 7.3071 by Bloomberg survey today.

BONDS: The yield on the 10-year China Government Bond was last at 2.7475%, up from Tuesday's close of 2.7425%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.16% to 3,107.32, while the CSI300 index increased 0.21% to 3,700.50. The Hang Seng Index rose 0.83% to 17,611.87.

FROM THE PRESS: The Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) plan to regulate shareholding reduction activities further. According to a notice issued on Tuesday, if a listed company experiences a breach of the issuance price or net asset value, or it has not paid cash dividends in the past three years or the cumulative cash dividends amount to less than 30% of the average net profit over the past three years, the controlling shareholder or actual controller will not be able to sell the company's shares through the secondary market. (Source: 21st Century Business Herald)

Several provinces including Sichuan and Hebei have launched a new batch of major projects expected to help stabilise investment in Q4. Sichuan is promoting a total of 1,874 major projects with a total investment of CNY1.1 trillion this week, covering CNY303 billion of infrastructure projects, CNY618 billions of industrial and scientific equipment projects and CNY160 billion of social welfare projects. Investment in major projects grew by 9.9% y/y in the first eight months, largely driving the 3.2% growth in overall fixed-asset investment. (Source: Securities Daily)

Local-government debt remained within the approved limit at the end of August, the Ministry of Finance noted in a recent report. National local-government debt stood at CNY38.7 trillion in August, within the approved limit of CNY42.1 trillion set by the National People's Congress. Central University of Finance and Economics Professor Bai Yanfeng said local governments can safely manage debt with the gradual improvement of the economy and the lowering of interest rates. Securities Daily said the central government still wants cities and counties to resolve debt risks through increased revenue, cost reduction and asset realisation.