MNI China Daily Summary: Monday, November 24

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY338.7 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY55.7 billion after offsetting maturities of CNY283 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.4703% from 1.4408%, Wind Information showed. The overnight repo average decreased to 1.3187% from 1.3209%. 

YUAN: The currency strengthened to 7.1056 against the dollar from the previous 7.1103. The PBOC set the dollar-yuan central parity rate lower at 7.0847, compared with 7.0875 set on Friday. The fixing was estimated at 7.1136 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.7850%, unchanged from previous close, according to Wind Information. 

STOCKS: The Shanghai Composite Index edged up 0.05% to 3,836.77, while the CSI300 index decreased 0.12% to 4,448.05. The Hang Seng Index rose 1.97% to 25,716.50. 

FROM THE PRESS: China's stock market correction may end after November, providing an opportunity for a spring rally, analysts from Dongwu Securities said, citing ample liquidity and further policy emphasis on technological innovation and a modern industrial system in H1 2026. The fundamentals of the market still support a further rally, Shanghai Securities News reported citing analysts, even as recent short-term adjustments have been driven by external factors, such as reduced expectations of a U.S. Federal Reserve rate cut and speculation of a possible "AI bubble." Chinese assets are expected to appreciate based on the country’s steady economic recovery, improved global competitiveness, higher strategic positioning of the capital market and increased inflow from household savings, analysts from GF Securities said.

The People’s Bank of China will sell CNY45 billion worth of yuan-denominated bills in Hong Kong on Monday, including CNY30 billion of three-month bills and another CNY15 billion of one-year bills, marking the sixth issuance this year, Shanghai Securities News reported. This move can tighten offshore yuan liquidity, increase the cost of short selling, and stabilise exchange rate expectations to prevent the formation of a consensus on unilateral depreciation, said Ming Ming, chief economist of CITIC Securities.

The proportion of central government spending should be increased to 30-40% by 2030 to help improve governance efficiency, which will require a top-down reform to adjust the responsibilities and powers of various central government departments, Yicai reported citing former Chinese Academy of Fiscal Sciences director Liu Shangxi. This proportion has remained around 14% since 2016, with local governments receiving about half of the national public budget revenue despite accounting for more than 80% of spending, which has led to the proliferation of off-balance-sheet debt, said Yuekai Securities chief economist Luo Zhiheng. Luo said spending responsibilities such as public safety, food and drug supervision, and pension insurance should be transferred to the central government as soon as possible.