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--Refiled in order to address cataloguing issue with original.
DATA: Chinese banks extended CNY1.28 trillion in new yuan loans in August,
marking the second consecutive monthly moderation. Total social financing (TSF),
rose to CNY1.52 trillion in August from CNY1.04 trillion in July. M2 money
supply grew by 8.2% y/y, slowing from 8.5% in July. M1 growth slowed, moderating
from 5.1% in July to a more-than-three-year low of 3.9% in August.
LIQUIDITY: The People's Bank of China injected CNY100 billion via 7-day
reverse repos and CNY20 billion via 14-day reverse repos, to maintain
"reasonable and ample" liquidity. Rates were kept unchanged at 2.55% and 2.70%
respectively. The CFETS-ICAP money-market sentiment index closed at 37, down
from 41 on Tuesday.
YUAN: The yuan appreciated to 6.8327 per dollar from Wednesday's close of
6.8680. The PBOC set the yuan central parity rate at 6.8488, stronger than
MONEY MARKET RATES: The benchmark seven-day deposit repo average decreased
to 2.6437% from 2.6584% Wednesday, while the overnight average fell to 2.5226%
from 2.5326%: Wind Information.
BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.6650%, up from Wednesday's close of 3.6550%, according to Wind Information.
STOCKS: The Shanghai Composite Index closed 1.15% higher at 2,686.58. Hong
Kong's Hang Seng Index rose 2.54% to 27,014.49.
FROM THE 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.
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
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