MNI China Daily Summary: Thursday, Nov 23

EXCLUSIVE: The yuan looks set to rally further thanks to U.S. dollar weakness and year-end demand for cash in China, while The People's Bank of China (PBOC) will continue to shore up the currency and react to firmer tone by narrowing the differential between its stronger daily fix and the market price, policy advisors and traders told MNI.

LIQUIDITY: The PBOC conducted CNY519 billion via 7-day reverse repo, with the rate unchanged at 1.80%. The operation has led to a net injection of CNY142 billion after offsetting the maturity of CNY377 billion reverse repos today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 2.0199% from 2.0378%, Wind Information showed. The overnight repo average increased to 1.8929% from 1.9011%.

YUAN: The currency strengthened to 7.1406 against the dollar from 7.1477 on Wednesday. The PBOC set the dollar-yuan central parity rate lower at 7.1212, compared with 7.1254 set on Wednesday. The fixing was estimated at 7.1508 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.7100%, up from Wednesday's close of 2.7000%, according to Wind Information.

STOCKS: The Shanghai Composite Index rose 0.60% to 3,061.86 while the CSI300 index increased 0.48% to 3,561.52. The Hang Seng Index was up 0.99% to 17,910.84.

FROM THE PRESS: China should increase financial support to ensure the delivery of housing projects, meet reasonable financing needs of property developers to reduce their credit-default risks and ease residents’ concerns over purchasing off-plan properties, said the Standing Committee of the National People’s Congress after reviewing the work report made by Pan Gongsheng, governor at the People’s Bank of China. It is necessary to keep optimising home-purchase policies and further promote financing institutions to lower actual lending rates and extend credit to automobiles, home furnishings and electronic products. (Source: NPC website)

China’s trade surplus will shrink next year as the world economic slowdown keeps demand for manufactured exports subdued, while improvements in China-U.S. relations will increase import demand for U.S. agricultural products, according to Zhang Ming, deputy director at the National Institution for Finance and Development. Zhang said the stock market will perform better in 2024 due to the recent strengthening of the yuan and marginal improvements in macro data. (Source: Yicai)

Shenzhen has lowered the minimum down-payment ratio for second homes to 40% from the previous 70-80% starting Thursday, one of the first tier-one cities to do so. Authorities also adjusted the standard for ordinary housings by removing the price cap of less than CNY7.5 million, which will allow more homebuyers to enjoy preferential tax policies. The housing market in Shenzhen may rebound for one-two months, but sustainability needs further observation, as the overall regulation remains relatively strict and buyer confidence has not yet fully recovered, said Zhang Hongwei, founder of Jingjian Consulting. (Source: The Beijing News)