MNI China Press Digest Nov 30: Bonds, Yuan, SMEs

Highlights from Chinese press reports on Thursday:

• The issuance of special refinancing bonds by 29 provincial governments has reached CNY1.37 billion as of Wednesday. The bonds are mainly used to repay arrears, high-interest non-standard debts and bonds raised by local government financing vehicles (LGFVs). Many creditors have accepted repayment plans with discounts, as most arrears and non-standard products have been in arrears for some time. About 77 LGFV bonds totalling CNY37.8 billion have been redeemed in advance since October, according to Tianfeng Securities. The market believes some of the special refinancing bonds are used to redeem the transactions, as local governments won’t be able to do so without incremental funds. (Source: 21st Century Business Herald)
• The Fed will begin benchmark interest rate cuts in 2024 which will strengthen the yuan and open up monetary-policy space for The People’s Bank of China, according to Hao Hong, chief economist at Grow Investment Group. Speaking at a recent conference, Hao said the Chinese stock market will no longer be restrained by the yield of U.S. long-term bonds in 2024 and will once again become reactive to PBOC policies. Next year, traders should expect the Shanghai Composite Index to move between 3,000 and 3,500 points, and the Hang Seng Index between 16,000 and 20,000 points.
• Policymakers in Beijing have begun a crackdown against large firms defaulting on payments owed to SMEs, which they say have become an increasing problem in the economy, according to the State Administration for Market Regulation. The central administration will work with local authorities to intensify punishment for major cases in accordance with the law and strengthen the accuracy and reporting standards of the national enterprise credit disclosure system.