MNI China Daily Summary: Friday, Sept 26

POLICY: Home price declines in major Chinese cities appear to be bottoming and may receive near-term support from the traditional September-October sales peak, though a broad, sustained recovery could take one to three years, advisors and analysts told MNI.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY165.8 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The PBOC also conducted CNY600 billion via 14-day reverse repos today. The operation led to a net injection of CNY411.5 billion after offsetting maturities of CNY354.3 billion today, according to Wind Information

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5313% from 1.6017% previously, Wind Information showed. The overnight repo average decreased to 1.3182% from the previous 1.4749%. 

YUAN: The currency weakened to 7.1345 against the dollar from the previous 7.1219. The PBOC set the dollar-yuan central parity rate higher at 7.1152, compared with 7.1118 set on Thursday. The fixing was estimated at 7.1459 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8750%, down from the previous close of 1.8811%, according to Wind Information.

STOCKS: The Shanghai Composite Index fell 0.65% to 3,828.11, while the CSI300 index decreased 0.95% to 4,550.05. The Hang Seng Index decreased 1.35% to 26,128.20.

FROM THE PRESS: The People’s Bank of China will roll out further measures to support the development of yuan bonds in Hong Kong, including promoting the bonds to become eligible collateral widely accepted overseas, Securities Times reported citing a speech by Vice Governor Zou Lan. The PBOC will support Hong Kong’s monetary authority to accept mainland bonds as eligible collateral for RMB Liquidity Facilities, as margin for Swap Connect and for various derivatives businesses of the OTC Clearing Hong Kong Limited, said Zou. Authorities will work to expand the pool of Swap Connect market makers, supply more high-credit offshore yuan assets in the Hong Kong market and accelerate preparations for the launch of yuan-denominated government bond futures there, Zou added.

The PBOC said the e-CNY International Operation Center has officially started operations in Shanghai, launching three business platforms, Financial News reported. Included are a cross-border payment platform aimed at supporting the internationalisation and cross-border use of yuan, a blockchain service platform for standardised on-chain transactions, and a digital assets platform offering financial-grade services and supporting existing financial infrastructure to expand onto the chain. The launch follows a plan first outlined by PBOC Governor Pan Gongsheng in June, the newspaper said.

The Ministry of Commerce launched an investigation into Mexico's tariffs and other trade restrictive measures against China, according to a ministry statement Thursday. The measures under investigation include Mexico's plans to raise tariffs on Chinese goods such as automobiles and parts, textiles, plastics, steel, home appliances and toys, as well as other trade and investment restrictions imposed in recent years, the statement said. The investigation, effective from Sept 25, will conclude in six months and can be extended by no more than three months.