MNI China Daily Summary: Thursday, Sept 12

MNI (BEIJING) - POLICY: Aluminium prices in China are likely to trend higher in September given favourable macro conditions and declining production expectations in Yunnan, Shanghai Metals Market analysts said.

POLICY: Foreign investors in China remain optimistic about the nation’s long-term prospects, said He Yongqian, spokesperson for the Ministry of Commerce.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY160.8 billion via 7-day reverse repos, with the rate unchanged at 1.70%. The operation led to a net injection of CNY97.5 billion after offsetting maturities of CNY60.3 billion, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8176% from 1.8106%, Wind Information showed. The overnight repo average increased to 1.7867% from 1.7811%.

YUAN: The currency weakened to 7.1236 against the dollar from 7.1131 on Wednesday. The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1214, compared with 7.1182 set on Wednesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.0050%, unchanged from Wednesday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.17% to 2,717.12 while the CSI300 index decreased 0.43% to 3,172.47. The Hang Seng Index rose 0.77% to 17,240.39.

FROM THE PRESS: 

Early mortgage repayments are impacting banks’ profitability and increasing operating costs, China Securities Journal reported. Outstanding mortgages in six major state-owned banks totalled CNY25.49 trillion in H1, down more than CNY320 billion from end-2023. Banks are reluctant to enforce relationship-damaging penalties, despite incurring additional manpower and resource costs needed to process early repayments, the newspaper said. Authorities should encourage commercial banks to innovate new re-lending and re-mortgage products, especially interest calculation methods to balance the interests of both parties better, the newspaper said, citing an unnamed industry insider.

China should intensify macroeconomic policy regulation in H2 and work to realise the potential of domestic demand, according to Xiang Libin, deputy director at the National Development and Reform Commission. Speaking at the 11th meeting of the Standing Committee of the 14th National People's Congress, Xiang said officials should unswervingly complete this year’s economic and social development tasks, while noting adverse external effects were increasing and domestic demand remained insufficient. (Source: Yicai)

China will support leveraging long-term investment potential of insurance funds, according to the latest guidelines from the State Council. The move signals insurance funds’ importance in the A-share market following policymakers’ repeated calls for developing long-term capital. High-dividend stocks are expected to become a key asset class for insurance firms, said analysts at China Merchants Securities. By end-Q2, the stock investment balance of property and personal insurance firms totalled CNY137 billion and CNY1.94 trillion, data from the National Financial Regulatory Administration showed. (Source: Securities Times)