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MNI China Press Digest Aug 28: Yuan Bonds, Profits, Debt

MNI picks keys stories from today's China press
Central Bank NewsPolicy NewsPBOCHomepageAPACChinaEM Policy NewsEM Central Bank NewsPeoples Bank of ChinaStoryRegion

MNI (BEIJING) - Highlights from Chinese press reports on Wednesday:

  • Overseas institutions increased overall yuan bond holdings to CNY4.5 trillion in July, up CNY1.26 trillion over the past 11 consecutive months of growth, Securities Daily reported. Interest spread trading and increased demand for yuan assets as a safe-haven choice had supported the growth, the news outlet reported, citing Yu Lifeng, an analyst at Golden Credit Rating. Yu noted revenue from holding a one-year interbank deposit certificate and simultaneously signing a one-year forward contract was 6.04% by end-July, higher than U.S. dollars' overseas borrowing costs, Yu added.
  • China’s industrial profits grew by 4.1% y/y in July supported by low base effects, according to Wu Chaoming, deputy director of the Caixin Research Institute. Industrial profits from January to July went up 3.6%, showing macro policy effects have emerged and market demand is gradually recovering, according to Zhou Maohua, macro researcher at Everbright Bank. However, the industrial sector faces challenges from weak demand, an uneven recovery, fluctuations in international energy commodity prices and overseas demand uncertainty, Zhou added.
  • Local governments facing increasing fiscal pressure will struggle to balance resolving debt risks with ensuring basic services and operations, Caixin reported. A recent fiscal report by Ar Horqin Banner, Chifeng City, Inner Mongolia Autonomous Region said fiscal resources can barely guarantee operational expenditures such as salary payments. Ar Horqin was facing serious credit default risks with little funding to resolve hidden debts, the report added. The general public budget revenue of Ar Horqin was CNY247 million in H1, down 9.8% y/y, Caixin reported.
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MNI (BEIJING) - Highlights from Chinese press reports on Wednesday:

  • Overseas institutions increased overall yuan bond holdings to CNY4.5 trillion in July, up CNY1.26 trillion over the past 11 consecutive months of growth, Securities Daily reported. Interest spread trading and increased demand for yuan assets as a safe-haven choice had supported the growth, the news outlet reported, citing Yu Lifeng, an analyst at Golden Credit Rating. Yu noted revenue from holding a one-year interbank deposit certificate and simultaneously signing a one-year forward contract was 6.04% by end-July, higher than U.S. dollars' overseas borrowing costs, Yu added.
  • China’s industrial profits grew by 4.1% y/y in July supported by low base effects, according to Wu Chaoming, deputy director of the Caixin Research Institute. Industrial profits from January to July went up 3.6%, showing macro policy effects have emerged and market demand is gradually recovering, according to Zhou Maohua, macro researcher at Everbright Bank. However, the industrial sector faces challenges from weak demand, an uneven recovery, fluctuations in international energy commodity prices and overseas demand uncertainty, Zhou added.
  • Local governments facing increasing fiscal pressure will struggle to balance resolving debt risks with ensuring basic services and operations, Caixin reported. A recent fiscal report by Ar Horqin Banner, Chifeng City, Inner Mongolia Autonomous Region said fiscal resources can barely guarantee operational expenditures such as salary payments. Ar Horqin was facing serious credit default risks with little funding to resolve hidden debts, the report added. The general public budget revenue of Ar Horqin was CNY247 million in H1, down 9.8% y/y, Caixin reported.