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     BEIJING (MNI) - The following are highlights from the China press for
Monday, January 8:  
     The yuan may lose its strength and trade about 6.6 against the dollar,
Sheng Songcheng, the People's Bank of China's former statistics chief, said
Saturday at a conference in Shanghai, reported Shanghai Securities News. The
Chinese currency closed on Friday at 6.4851, according to MNI data. The yuan had
recently been boosted by the widening gap between China's market rates and the
U.S. Federal Reserve's benchmark interests rate, by the market's betting on the
yuan's appreciation and on the weakening U.S. dollar index, Sheng argued. The
Central Economic Working Conference last month, attended by China's top
policymakers, emphasized controlling money supply and maintaining a "reasonable
and balanced" yuan exchange rate, a decision that has also impacted the market,
Sheng noted. Sharp movements in either direction won't benefit the Chinese
economy, Sheng said. (Shanghai Securities News)
     Top researchers at the People's Bank of China suggested that higher
interest rates may help contain asset bubbles and debt expansion therefore
should be used to manage broad financial activities, the China Daily reported
Monday. Interest rates can be raised now given that prices of industrial
products and profitability have both improved since last year, the paper cited
Ji Min, deputy head of the central bank's research bureau, as saying over the
weekend. Rates of inflation and foreign exchange should be factored in before a
rate hike, Ji said. However, a rate hike coupled with deleveraging and cutting
of excess capacity by industrial producers could further improve returns by
discouraging costly expansion, the report noted. (China Daily)
     The China Banking Regulatory Commission (CBRC) on Saturday issued a
guideline on entrusted loans to further reduce leveraging and preventing risks
in the financial sector, the Economic Information Daily reported. According to
the guideline, asset management products(AMP) cannot be entrusted for bank
loans. Clients of entrusted loans cannot re-lend them for arbitrage. As well,
entrusted loans cannot be invested in bonds, futures, financial derivative
products or AMP. Citing unidentified sources, the newspaper said the new rule
targets non-standard funding through AMPs issued by securities and mutual fund
companies. It also affects entrusted loans such as those in properties and local
government financing vehicles, the report said. (Economic Information Daily)
     China's small and medium-sized city commercial banks may be under greater
pressure to reduce balance sheets by the government's push for deleveraging and
stricter oversight, the China Securities Journal reported Monday, citing Zeng
Gang, director of Banking Research Center with the Chinese Academy of Social
Sciences (CASS). Regulators will focus on shadow banking and cross risks in the
financial sector this year, and continue cracking down on illegal businesses.
Off-balance-sheet transactions will be made more transparent, so banks can no
longer expand using shadowy transactions, the report noted. (China Securities
--MNI Beijing Bureau; +86 (10) 8532 5998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]