MNI China Daily Summary: Thursday, October 9

POLICY: China’s Ministry of Commerce announced on Thursday that it will impose export controls on certain rare earth-related items and technologies. The ministry said in a statement that authorities had discovered some foreign organisations and individuals had illegally obtained Chinese rare earth technologies, used them to produce related items, and supplied them to military or other sensitive sectors, causing “significant harm or potential threats to China’s national security and interests.”

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY612 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The central bank also conducted another CNY1.1 trillion via 3-month outright reverse repos. The operation led to a net drain of CNY351.3 billion after offsetting maturities of CNY2,063.3 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.5073% from 1.4376% on Sept 30, the last working day before the week-long National Day Holiday, Wind Information showed. The overnight repo average decreased to 1.3271% from 1.3855% previously. 

YUAN: The currency weakened to 7.1246 against the dollar from the previous 7.1186. The PBOC set the dollar-yuan central parity rate higher at 7.1102, compared with 7.1055 set before the holiday. The fixing was estimated at 7.1458 by Bloomberg survey today. 

BONDS: The yield on 10-year China Government Bonds was last at 1.8450%, down from the close of 1.8575% on Sept 30, according to Wind Information.

STOCKS: The Shanghai Composite Index rallied 1.32% to 3,933.97, while the CSI300 index increased 1.48% to 4,709.48. The Hang Seng Index decreased 0.29% to 26,752.59.

FROM THE PRESS: The PBOC will likely continue to increase its gold holdings at a moderate pace to cope with international uncertainties and support yuan internationalisation, Yicai.com reported citing analysts after its reserves rose for the 11th month by 40,000 ounces to 74.06 million ounces from August to September. Gold accounts for only 7.7% of the country's official international reserve assets, significantly lower than the global average of 15%, the newspaper noted. Meanwhile, increased demand from central banks will support gold's long-term upward trend, with spot gold setting a new high of USD4,040 per ounce Wednesday, the newspaper said citing analysts.

A-shares can expect to rally in October, supported by the dual easing of global monetary and fiscal policies, and trading opportunities provided by listed companies’ Q3 report disclosures, China Securities Journal reported citing analysts. A-shares have room for catch-up growth after the Oct 1-8 holiday when stock markets of most major economies around the world rose, analysts from Zhongtai Securities said. The balance of margin trading in A-shares remained at a high level in the last two trading days before the holiday, indicating funds remain optimistic about the post-holiday trend, the analysts added.

Increasing incentives for whistleblowers in the capital market will boost internal supervision and protect investors, noted Securities Daily in a commentary after authorities solicited public opinions on adjustments to reward levels. The reward amount has been increased to 3% of the fines and confiscations from 1%, and the maximum reward for providing clues to major illegal activities has increased to CNY500,000 from CNY100,000. For those cases with significant nationwide impact or involving large amounts of money, the upper limit was raised to CNY1 million.