MNI China Press Digest Nov 10: PBOC, Liquidity, Property Bonds

The following lists highlights from Chinese press reports on Wednesday:

• The People's Bank of China's new lending tool formulated to boost bank lending to carbon reduction efforts may lead to as much as CNY3 trillion additional green lending next year, and help boost overall social financing, the 21st Century Business Herald reported citing Dai Zhifeng, research head of Zhongtai Securities. The central bank didn't fix a scale, leaving the upper limit open, the newspaper said. As intended, the PBOC will provide 60% of the principal while commercial banks provide the remaining 40% when lending to green projects, an arrangement that both utilizes banks' capital and encourages prudence, the newspaper said citing Zeng Gang, deputy director of the National Institution for Finance & Development.
• The PBOC is likely to continue raising the scale of reverse repurchase agreements through the yearend to meet rising liquidity demand, extending the steady increase seen this month, the Economic Information Daily reported citing analysts. The central bank on Tuesday conducted CNY100 billion RR via open market operations, increasing from earlier daily scales such as CNY10 billion and CNY50 billion. The issuances of local government bonds are expected to be completed this month, pressuring liquidity, while MLFs totaling CNY1 trillion are also set to mature, the newspaper said. Policymakers will likely resist the use of cutting banks' reserve ratios and rates as they balance short and long-term economic goals, the newspaper said citing analyst Wang Yifeng of Everbright Securities. China will likely maintain prudent monetary policies next year and facilitate structural changes such as increased lending to SMEs and green industries, as well as staying on guard for changes in U.S. asset rates of returns and global capital movement, the newspaper said.
• Foreign investors, including Goldman Sachs, are buying Chinese developers' dollar bonds at cheap prices at a time when frequent defaults on these bonds by cash-strapped developers caused widespread panic, the PBOC-run newspaper Financial News reported on its WeChat account. The prices on some developers' dollar bonds have rebounded after they bought back some to shore up confidence, the newspaper said. The financing conditions of developers have mostly normalized with real estate loans surging in October by as much as CNY200 billion from September, the newspaper said.