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MNI China Press Digest Nov 16: RRR Debate, Lower LPR, Property

MNI (Singapore)
MNI (Beijing)

MNI summarises the key stories from the Chinese press.

True

The following lists highlights from Chinese press reports on Wednesday:

  • Market analysts are divided on outlook for further cuts to the reserve requirement ratio and interest rates, with some analysts seeing the possibility of a RRR cut in December or January, Shanghai Securities News reported. Some analysts argue low-cost funds should be provided to banks through RRR cuts as they face narrowing interest margins as home loans will need to be re-priced early next year following a total 35bp cut to the 5-year Loan Prime Rate this year, the newspaper said citing Postal Savings Bank researcher Lou Feipeng. Other analysts said the central bank will be wary of easing as high U.S. inflation is unlikely to change significantly, the newspaper said.
  • The benchmark 5-year Loan Prime Rate, which lenders based their mortgage rates on, is expected to be lowered this year as policymakers aim for a soft landing in the real estate sector to help stabilise growth and control financial risks, Securities Times reported citing Wang Qing, chief analyst at Golden Credit Rating. Though the central bank maintained its rate on the medium-term lending facility - an anchor to LPR - in November, the LPR is likely to head lower this year to accelerate credit expansion. The top priority for credit policy is to increase lending to the property sector and stabilise investment in infrastructure and manufacturing, the newspaper said citing analysts.
  • Recent policies to improve property developers’ financing environment cannot be considered as a rescue for the industry, as these measures aim to provide liquidity relief rather than prevent a balance sheet recession, Yicai.com said in an editorial. It is necessary to adhere to the idea that “housing is for living not speculation”, avoid misunderstanding of favorable policies, and guide investors to prepare for corresponding risks, the newspaper said.
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The following lists highlights from Chinese press reports on Wednesday:

  • Market analysts are divided on outlook for further cuts to the reserve requirement ratio and interest rates, with some analysts seeing the possibility of a RRR cut in December or January, Shanghai Securities News reported. Some analysts argue low-cost funds should be provided to banks through RRR cuts as they face narrowing interest margins as home loans will need to be re-priced early next year following a total 35bp cut to the 5-year Loan Prime Rate this year, the newspaper said citing Postal Savings Bank researcher Lou Feipeng. Other analysts said the central bank will be wary of easing as high U.S. inflation is unlikely to change significantly, the newspaper said.
  • The benchmark 5-year Loan Prime Rate, which lenders based their mortgage rates on, is expected to be lowered this year as policymakers aim for a soft landing in the real estate sector to help stabilise growth and control financial risks, Securities Times reported citing Wang Qing, chief analyst at Golden Credit Rating. Though the central bank maintained its rate on the medium-term lending facility - an anchor to LPR - in November, the LPR is likely to head lower this year to accelerate credit expansion. The top priority for credit policy is to increase lending to the property sector and stabilise investment in infrastructure and manufacturing, the newspaper said citing analysts.
  • Recent policies to improve property developers’ financing environment cannot be considered as a rescue for the industry, as these measures aim to provide liquidity relief rather than prevent a balance sheet recession, Yicai.com said in an editorial. It is necessary to adhere to the idea that “housing is for living not speculation”, avoid misunderstanding of favorable policies, and guide investors to prepare for corresponding risks, the newspaper said.