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MNI China Press Digest Sep 20: Lower LPR, U.S. Debt, Delisting

MNI summarises the key stories from the Chinese press.

True

The following lists highlights from Chinese press reports on Tuesday:

  • China’s benchmark Loan Prime Rates could be cut following the reduction of deposit interest rates by some Chinese banks, the China Securities Journal reported citing analysts. The cost of funding for banks has declined sharply as the weighted average interest rate on deposits has dropped by about 18 bps since July. The 5-year LPR, which many lenders base their mortgage rates on, could be cut to help stabilise the property market, the newspaper cited analysts as saying. Both 1-year and 5-year LPRs were kept unchanged at 3.65% and 4.30% respectively in September.
  • China’s holdings of U.S. debt increased by USD2.2 billion in July, reversing seven consecutive months of reductions, the 21st Century Business Herald reported citing data from the U.S. Treasury Department. China’s total holdings rebounded to USD970 billion. Increased holdings of U.S. bonds can help stabilize China’s foreign exchange reserves amid the sharp rise in the U.S. Dollar Index and they are much safer than holding U.S. stocks, the newspaper said. China may have adjusted its investment strategy by increasing its holdings of short-term U.S. bonds as their yields are attractive compared to longer term yields given the inversion in the U.S. yield curve.
  • The U.S. Public Company Accounting Oversight Board began reviewing the audit documents of Chinese companies traded on U.S. stock markets on Monday, with the first batch of companies including internet giant Alibaba, NetEase, Baidu and JD.com, Yicai.com reported. More than 160 Chinese companies have been identified by the U.S. watchdog as not complying with U.S. auditing rules. The risk of Chinese stocks being delisted from U.S. exchanges has dropped to 50% from 95% in March after China and U.S. reached an audit agreement in August. A complete elimination of delisting risk could drive the price-earnings ratio of these Chinese stocks to increase by 11%, the newspaper said citing Goldman Sachs analysts. The entire process will take 8 to 10 weeks, and the results may be available in early December.
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The following lists highlights from Chinese press reports on Tuesday:

  • China’s benchmark Loan Prime Rates could be cut following the reduction of deposit interest rates by some Chinese banks, the China Securities Journal reported citing analysts. The cost of funding for banks has declined sharply as the weighted average interest rate on deposits has dropped by about 18 bps since July. The 5-year LPR, which many lenders base their mortgage rates on, could be cut to help stabilise the property market, the newspaper cited analysts as saying. Both 1-year and 5-year LPRs were kept unchanged at 3.65% and 4.30% respectively in September.
  • China’s holdings of U.S. debt increased by USD2.2 billion in July, reversing seven consecutive months of reductions, the 21st Century Business Herald reported citing data from the U.S. Treasury Department. China’s total holdings rebounded to USD970 billion. Increased holdings of U.S. bonds can help stabilize China’s foreign exchange reserves amid the sharp rise in the U.S. Dollar Index and they are much safer than holding U.S. stocks, the newspaper said. China may have adjusted its investment strategy by increasing its holdings of short-term U.S. bonds as their yields are attractive compared to longer term yields given the inversion in the U.S. yield curve.
  • The U.S. Public Company Accounting Oversight Board began reviewing the audit documents of Chinese companies traded on U.S. stock markets on Monday, with the first batch of companies including internet giant Alibaba, NetEase, Baidu and JD.com, Yicai.com reported. More than 160 Chinese companies have been identified by the U.S. watchdog as not complying with U.S. auditing rules. The risk of Chinese stocks being delisted from U.S. exchanges has dropped to 50% from 95% in March after China and U.S. reached an audit agreement in August. A complete elimination of delisting risk could drive the price-earnings ratio of these Chinese stocks to increase by 11%, the newspaper said citing Goldman Sachs analysts. The entire process will take 8 to 10 weeks, and the results may be available in early December.