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Free AccessMNI China Press Digest: Friday, Dec. 15
BEIJING (MNI) - The following are highlights from the China press for
Friday, Dec. 15
The impact of the People's Bank of China's rate hikes on Thursday will be
limited and the move reflected supply and demand in the market in a bid to guide
expectations, the Financial News, a journal run by the PBOC reported Friday,
citing analysts. The interest rate spread between China and the U.S has expanded
to about 160 bps, which means the Federal Reserve rate hike will not pressure
the yuan exchange rate, the report argued. The slight PBOC rate hike delivered a
signal that deleveraging and risk prevention will continue, indicating the PBOC
will raise the rates on its liquidity instruments even when it is not the proper
time to adjust its benchmark interest rates, the report said. The rate move is
also intended to balance economic growth, the curbing of asset bubbles and risk
prevention, the report said. (Financial News)
China needs to pay close attention to the accelerating withdrawal of global
monetary policy easing and react as needed in a timely and proper manner, the
Economic Information Daily said in the front page commentary on Friday. China
should be fully prepared for the spillover effects of monetary policy in
developed countries, the commentary warned. Some emerging countries have made
moves to offset the impact by cutting interest rates, which indicates economic
growth drivers in those countries are fading. But it is hard to reverse the
impact of the world-wide monetary policy tightening trend, which could increase
the risk of capital outflows from emerging markets, the commentary noted.
(Economic Information Daily)
The Chinese bond market is expected to see a short-term recovery after the
People's Bank of China's interest rate hike Thursday and given the stable
performance of economy, but institutions are still worried about rising pressure
on bond yields later next year, the China Securities Journal reported Friday.
The slight 5 bps rate hike was much smaller than market expectations, so the
PBOC will have to adjust its policy rates more frequently as the Federal Reserve
continues to hike its rates, the report said. The official launch of the new
regulation to control asset management products will worsen the bond market
situation. The yield on government bonds will fall in the first quarter of next
year, but there will not be a downward trend, with upward pressure later on, the
report predicted. (China Securities Journal)
The issuance of two-year government bonds should be increased as this is a
key medium-term tenure on the government bond yield curve, the People's Daily
reported Friday, citing Zhang Jiqiang, the managing director of fixed-asset
department of China International Capital Corporation. Important price about the
government bond yield curve will be generated via an increase in the size and
frequency of two-year government bond issues, and so improve the efficiency of
compiling the yield curve, Zhang said. In addition, more two-year issues would
inject needed liquidity with that duration, Zhang said. (People's Daily)
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.