MNI China Press Digest: Rating Regulation, MLF, Aug Indicators

     BEIJING (MNI) - The following lists highlights from the Chinese press:

     Stricter regulations on rating agencies released by the central bank and

security regulators on Tuesday will promote help healthier development of the

bond market and the rating industry, Financial News, a newspaper owned by the

People's Bank of China (PBOC), said in a commentary. The new rules should bridge

regulatory differences between interbank bond markets and bond exchanges, the

newspaper said. They will also encourage mergers between rating organizations

under same ownership, increase the scrutiny over rating agencies, and bring

their professional levels up to par with international bond rating firms,

Financial News said.

***Comment: Regulators have increased pressure on bond agencies to improve their

level of professionalism after several cases of bond defaults exposed many bond

raters' subpar standard.

     The PBOC may conduct another MLF in the last 10 days of September after

CNY176.5 billion concluded on Sept 7 to hedge maturing instruments, Financial

News, the central bank's official newspaper, said in a report citing market

participants. The PBOC's resumption of reverse repos yesterday after 15 days in

the sum of CNY60 billion was to keep reasonable and ample liquidity and

stabilize market expectations, the newspaper said. There won't be many factors

affecting liquidity in Sept, interbank market liquidity will be kept reasonable

and ample, and with the offering of local government bonds, policy coordination

will be the focus of the market, the newspaper said. The PBOC is boosting

medium-term liquidity by opting for medium-term instruments while reducing

short-term repo purchases, it said. Liquidity in the rest of Sept won't likely

be tightened nor will it be significantly boosted, the newspaper said citing

analyst Cui Zhuoju at BOCI Securities.

     China's August economic performance indicators, including fixed asset

investment, consumption and retail sales may remain weak, the Economic

Information Daily said in a report citing surveys of economists. Soft automobile

sales may help cap retail sales growth at 8.8%, while slower steel output may

weaken industrial output growth to 6.0%, the daily said citing Xie Yaxuan of

China Merchant Securities. Fixed asset investment may bottom out at 5.7% given

policy support indicated by the Politburo at the end of July, the daily said.

The government is expected to boost long-term investment in advanced

manufacturing to cushion impact of the downtown in traditional manufacturing,

while increased credit may help small businesses ease funding shortages, the

daily said.  

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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