MNI China Daily Summary: Monday, November 06

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY18 billion via 7-day reverse repo on Monday, with the rate unchanged at 1.80%. The operation has led to a net drain of CNY640 billion after offsetting the maturity of CNY658 billion reverse repos today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.7691% from 1.7564%, Wind Information showed. The overnight repo average decreased to 1.5806% from 1.6228%.

YUAN: The currency strengthening to 7.2756 against the dollar from previous close of 7.3133 the PBOC set the dollar-yuan central parity rate lower at 7.1780, compared with 7.1796 set on Friday. The fixing was estimated at 7.2860 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.6900%, down from 2.6925% at the previous close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.91% to 3,058.41, while the CSI300 increased 1.35% to 3,632.61. The Hang Seng Index was up 1.71% to 17,966.59.

FROM THE PRESS: China will actively pursue joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as it seeks to promote economic globalisation with other countries, according to Premier Li Qiang. Speaking at the International Import Expo in Shanghai on Sunday, Li said China wants to fully participate in WTO reforms, increase stability of global supply chains and deepen the Belt and Road cooperative partnership. At the same time, Beijing strongly opposes unilateralism and protectionism, and will further relax market access and protect the rights for foreign investors in accordance with the law. (Source: Yicai)

The Ministry of Finance will accelerate the issuance and use of the additional CNY1 trillion government bonds as well as local government special bonds and maintain reasonable spending, Finance Minister Lan Fo'an has said. The ministry will soon release a project budget, and urge local governments to make good use of funds to form a physical workload quickly, said Lan. Authorities will also implement “a basket of plans” to resolve local debt risks actively and steadily. (Source: Xinhua News Agency)

China should expand government debt and boost credit to drive the growth of financial assets in society which will increase nominal income and help restore consumption in the short term, said Zhang Bin, deputy director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. Zhang believes the government increase in public investment stabilises aggregate demand and will not crowd out private investment. (Source: 21st Century Business Herald)