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MNI China Press Digest Oct 10: Fiscal, Deposit Rates, ETFs

MNI picks key stories from today's China press.
Central Bank NewsPolicy NewsPBOCHomepageAPACChinaEM Policy NewsChinaEM Central Bank NewsPeoples Bank of ChinaGlobalStoryRegion

MNI (BEIJING) - Highlights from Chinese press reports on Thursday:

  • Market investors should manage their expectations for additional fiscal stimulus, as the current priority is to make good use of existing proactive fiscal policies, while any additional issuance of treasury bonds or special treasuries will need to wait until late October to be passed by the Standing Committee of the National People's Congress, Yicai.com reported citing analysts. The possibility of issuing another CNY1 trillion special treasuries would increase should downward pressure rise in Q4, the newspaper said citing analysts.
  • Banks will likely further lower deposit rates to ease pressure on their shrinking net interest margin following the recent cut to existing housing mortgage rates, China Securities Journal reported citing analysts. The next round of deposit rate cuts may see a 0.2-0.25 percentage point reduction, analysts from Bank of China estimated. A 50 basis point cut to existing housing mortgages will lead to a 7bp reduction in the bank’s net interest margin as well as a 3% and 6% drop in operating income and net profit, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance. The average net interest margin was 1.54% in Q2, still at a historical low, the newspaper added.
  • The total size of stock ETFs has exceeded CNY3 trillion to set a new high, as various funds seek to enter the stock market through the funds amid improved investor confidence, 21st Century Business Herald reported. The net asset value of stock ETFs rose by about CNY1 trillion in the past six trading days as of Oct 8 when the Shanghai Composite Index and Shenzhen Component Index surged by 18.55% and 30.61%, the newspaper said. The substantial expansion was mainly attributed to increasing holdings by "national team" funds such as Central Huijin and individual investors’ shifting to portfolio investment.
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MNI (BEIJING) - Highlights from Chinese press reports on Thursday:

  • Market investors should manage their expectations for additional fiscal stimulus, as the current priority is to make good use of existing proactive fiscal policies, while any additional issuance of treasury bonds or special treasuries will need to wait until late October to be passed by the Standing Committee of the National People's Congress, Yicai.com reported citing analysts. The possibility of issuing another CNY1 trillion special treasuries would increase should downward pressure rise in Q4, the newspaper said citing analysts.
  • Banks will likely further lower deposit rates to ease pressure on their shrinking net interest margin following the recent cut to existing housing mortgage rates, China Securities Journal reported citing analysts. The next round of deposit rate cuts may see a 0.2-0.25 percentage point reduction, analysts from Bank of China estimated. A 50 basis point cut to existing housing mortgages will lead to a 7bp reduction in the bank’s net interest margin as well as a 3% and 6% drop in operating income and net profit, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance. The average net interest margin was 1.54% in Q2, still at a historical low, the newspaper added.
  • The total size of stock ETFs has exceeded CNY3 trillion to set a new high, as various funds seek to enter the stock market through the funds amid improved investor confidence, 21st Century Business Herald reported. The net asset value of stock ETFs rose by about CNY1 trillion in the past six trading days as of Oct 8 when the Shanghai Composite Index and Shenzhen Component Index surged by 18.55% and 30.61%, the newspaper said. The substantial expansion was mainly attributed to increasing holdings by "national team" funds such as Central Huijin and individual investors’ shifting to portfolio investment.