MNI China Press Digest March 8: Rate Hike; Banks; Capacities

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

Thursday:

     The Medium-term Lending Facilities injection yesterday raised the

possibility that the PBOC may hike its monetary policy rates following a very

likely U.S. Fed rate hike in March, reported the China Securities Journal. The

PBOC did not inject enough to cover all MLF maturing in March and only rolled

over the expired amount yesterday, suggesting there will be another MLF

injection this month. This injection is likely to happen on March 16, when a

total of CNY189.5 billion in MLF loans will mature, the report said. The rate

increase, if it happens, will likely be 5 basis points, the same as in December,

the report said.  

     Provision coverage ratios and reserves for bad loans are both to be lowered

to encourage banks to convert more off-balance-sheet assets, like non-standard

assets, to loans, reported the Securities Times. These changes are not to boost

banks' profits; rather, with new regulation boosting banks' capital, banks are

able to convert more non-standard assets to loans and will no longer fail to

meet regulators' requirements, the report said. This move also suggests

regulators are encouraging banks not to hide their risks and to be transparent

with regulators, the report said.  

     The campaign to cut overcapacities will see difficulties in 2018, the

Economic Information Daily reported. For example, the Government Report set a

target to cut 150 million tonnes in coal capacities in 2018, which is higher

than expected, especially as most coal mines are currently making profits -

giving companies less motivation to shut down these mines, the report said,

citing Meng Xiangwen, an analyst at Shenwan Hongyuan Securities. More policies

need to come out to support the settlement of "zombie companies," Li Yuhua, the

mayor of Shizuishan city in Ningxia province, has said, according to the report.

--MNI Beijing Bureau; +86 10 85325998; email: he.wei@marketnews.com

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

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]