MNI China Daily Summary: Wednesday, December 24

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY26 billion via seven-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY20.8 billion after offsetting maturities of CNY46.8 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.3800% from 1.4105%, Wind Information showed. The overnight repo average decreased to 1.2624% from 1.2691%.

YUAN: The currency strengthened to 7.0161 to the dollar from 7.0287 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 7.0471, compared with 7.0523 set on Tuesday. The fixing was estimated at 7.0265 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8275%, down from Tuesday's close of 1.8315%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index was up 0.53% to 3,940.95, while the CSI300 index edged up 0.29% to 4,634.06. The Hang Seng Index gained 0.17% at 25,818.93.

FROM THE PRESS: The yuan will continue to appreciate against the U.S. dollar amid willingness of Chinese exporters to settle foreign exchange, but regulators will remain cautious towards any large-scale or rapid cross-border capital flows, Securities Times reported. The People’s Bank of China is guiding expectations through the central parity rate, while also influencing the speed of inflows by reducing the discount rate in the swap market, the newspaper said. The yuan is expected to appreciate to 6.7 against the dollar by end-2026, and further to 6.5 by end-2027, the Times said, citing Xiong Yi, chief China economist at Deutsche Bank. 

Local authorities are expected to further stimulate housing demand in 2026, as top policymakers urged city governments to make full use of their autonomy to adjust housing policies in a timely manner, The Paper reported, following the conclusion of the National Housing and Urban-Rural Development Work Conference in Beijing. Local-level specific measures such as clearing up restrictive measures, increasing home purchase subsidies, and enhancing the loan support from housing provident funds are expected, the newspaper said, citing analysts from China Index Academy. 

State-owned enterprises (SOEs) directly administered by the central government are urged to strengthen quality and the management of the market capitalisation of listed companies, while promoting strategic restructuring and high-quality mergers and acquisitions, cls.cn reported, citing Zhang Yuzhuo, director of the State-owned Assets Supervision and Administration Commission. Zhang said state-owned capital should be focused in key areas such as new energy, electric vehicles, new materials, aerospace, low-altitude economy, quantum technology, and 6G.