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MNI China Press Digest Aug 22: Bond Market, NPLs, Housing

MNI (Singapore)

The following lists highlights from Chinese press reports on Monday:

  • International investors are returning to the Chinese bond market, with last week's surprise PBOC rate cut fueling bullish sentiment, Yicai.com reported. There was a net inflow of USD5.6 billion into Chinese bonds on the part of international investors during the first half of August, reversing the bulk of the net outflow of ~USD6.9 billion observed in the prior six months, the newspaper said. Many traders believe that yields will move lower based on expectations for slower economic growth and further PBOC easing, the newspaper said, citing analysts.
  • The pressure stemming from banks’ non-performing loans will continue to increase as economic headwinds gradually feed through to the financial sector, Yicai.com reported, citing Shang Fulin, former chairman of the China Banking Regulatory Commission, speaking at a weekend forum. The policy implemented to defer loan repayment for struggling enterprises may delay the risk exposure of some “zombie” companies and weaken economic vitality, Shang said. Banking regulators should continue to fully expose and increase the disposal of non-performing assets, emphasising the expansion of capital replenishment for small and medium-sized banks to enhance their risk resistance capabilities, the newspaper wrote, citing Shang.
  • China’s Ministry of Housing and Urban-Rural Development said it will support the construction and delivery of overdue unfinished housing projects through special loans from policy banks, the Securities Times reported on Saturday. Following a wave of mortgage boycotts across the country last month, it is expected that such special loans will leverage bank loans for housing developers, ensuring the delivery and maintaining social stability, the newspaper said, without specifying further details.
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