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MNI China Press Digest Nov 15:FDI, Deposit Rate, Rating Agency

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MNI picks keys stories from today's China press

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Highlights from Chinese press reports on Wednesday:

  • The decrease in foreign direct investment should not be simply interpreted as growing disinvestment, as it is also affected by declining profits of foreign industrial enterprises and changing exchange rate spreads, 21st Century Business Herald reported citing experts. The first quarterly deficit in FDI was recorded in China’s balance of payment – a net outflow of USD11.8 billion in Q3, raising market concerns. However, the Ministry of Commerce reported the actual amount of foreign capital used was CNY919.97 billion, a year-on-year decrease of only 8.4%, which is more internationally comparable, the newspaper said.
  • Commercial banks will lower deposit interest rates further as the reductions on existing housing mortgage rates pressure profit margins, said Ming Ming, chief economist at CITIC Securities. Ming estimates major banks may play a leading role in cutting the pricing level of long-term deposits and a 10-30bp cut will help lower the average deposit cost by about 2-4bp. Recently, rural commercial banks and village banks in Jilin, Henan and Shandong provinces have cut rates on one-year, three-year, and five-year deposits by 10-40bp, mainly to follow up on the national deposit rate cut by major banks in September. The average interest rate on one-year deposits was 1.988% after the September cut. (Source: Shanghai Securities News)
  • The People’s Bank of China will support powerful financial technology forces to enter the rating market and encourage existing institutions to consolidate and grow, according to an article published on its website on Tuesday. It is necessary to enhance the independence and credibility of rating agencies, the article said. The central bank also encouraged rating agencies to expand overseas markets and increase international competitiveness. There are 52 registered rating agencies in China.
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Highlights from Chinese press reports on Wednesday:

  • The decrease in foreign direct investment should not be simply interpreted as growing disinvestment, as it is also affected by declining profits of foreign industrial enterprises and changing exchange rate spreads, 21st Century Business Herald reported citing experts. The first quarterly deficit in FDI was recorded in China’s balance of payment – a net outflow of USD11.8 billion in Q3, raising market concerns. However, the Ministry of Commerce reported the actual amount of foreign capital used was CNY919.97 billion, a year-on-year decrease of only 8.4%, which is more internationally comparable, the newspaper said.
  • Commercial banks will lower deposit interest rates further as the reductions on existing housing mortgage rates pressure profit margins, said Ming Ming, chief economist at CITIC Securities. Ming estimates major banks may play a leading role in cutting the pricing level of long-term deposits and a 10-30bp cut will help lower the average deposit cost by about 2-4bp. Recently, rural commercial banks and village banks in Jilin, Henan and Shandong provinces have cut rates on one-year, three-year, and five-year deposits by 10-40bp, mainly to follow up on the national deposit rate cut by major banks in September. The average interest rate on one-year deposits was 1.988% after the September cut. (Source: Shanghai Securities News)
  • The People’s Bank of China will support powerful financial technology forces to enter the rating market and encourage existing institutions to consolidate and grow, according to an article published on its website on Tuesday. It is necessary to enhance the independence and credibility of rating agencies, the article said. The central bank also encouraged rating agencies to expand overseas markets and increase international competitiveness. There are 52 registered rating agencies in China.