MNI: China Press Digest, Feb 7: ABS, Liquidity, PPP

     BEIJING (MNI) - The following are highlights from the Chinese press for

Wednesday:

     Chinese financial regulators' move to clamp down on non-standard wealth

management products will increase the need for asset-backed securities in the

market, reported 21st Century Business Herald on Wednesday. As of Tuesday,

outstanding ABS reached CNY1.07 trillion, more than 21 times the total from

three years ago. The reduction of credit quotas will also help ABS continue

growing this year. The real estate investment trusts subcategory saw strong

growth, as the Chinese government is campaigning to develop the housing rental

market.  

     The impact of PBOC draining liquidity would be limited: market risks would

not be high, and liquidity before the Spring Festival would remain relatively

loose, reported Shanghai Securities News on Wednesday. Before the end of March,

only CNY170 billion reverse repos will mature, and CNY538.5 billion

medium-lending facilities are due in February and March. The PBOC is very likely

to maintain loose liquidity as previous years showed that financial

institutions' demand for money supply tends to increase before the Spring

Festival. Liquidity may not be too tight after the festival as cash is expected

to flow back - countering the negative effects caused by maturing reverse repos,

some maturing in contingent reserve arrangements, and pressure on financial

institutions to meet liquidity assessment requirements set by regulators.

     Chinese regulators are working to standardise public-private partnership

projects and enhance their quality, reported Economic Information Daily on

Wednesday. This followed notice of a drop in the number of projects and amount

of investments in the fourth round of PPP projects approved by the Ministry of

Finance. The ministry made public the fourth round of PPP pilot projects on

Tuesday: total 356, 120 less than the third round; total investment at CNY758.8

billion, CNY412 billion more than the previous round. Transportation came first

in investments, followed by city infrastructure and integrated city development:

Daily. This release soothed market concerns that PPPs would be paused due to the

government's frequent regulation announcements. Though the government is trying

to reorganize PPPs and tighten supervision, it still supports the continued

development of PPPs.

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

--MNI Beijing Bureau; +86-10-8532-5998; email: beijing@marketnews.com

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