MNI China Press Digest Sep 22: PBOC, Demand, Listed Firms

Highlights from Chinese press reports on Monday:

• The People’s Bank of China’s Friday move to adjust the 14-day reverse repo operations to a fixed amount, interest rate tendering, and multiple price bidding system aimed at strengthening the status of the 7-day reverse repo rate as the policy interest rate, said Securities Daily in a commentary. Previously, the market regarded the 14-day reverse repo as a tool with policy attributes given its rate was fixed at the 7-day rate plus 15 basis points. Meanwhile, the operation time and scale will be determined based on liquidity management needs, offering the PBOC more flexibility and reflecting its refined control over liquidity injection, the newspaper said.
• Weak demand is blunting the impact of measures to curb excessive competition, which have only lifted producer prices moderately, Guan Tao, global chief economist at BOCI China, wrote in an article published on Yicai.com. Guan urged authorities to step up efforts to support demand through job creation, investment expansion and timely policy adjustments. He suggested the government consider hiring college graduates who have been unemployed for several years to collect labour and consumption statistics, noting the youth jobless rate for those aged 16-24 rose 0.1 percentage point year-on-year to 18.9% in August, the highest since records began.
• Listed companies will likely continue to move their deposits into wealth management products, with the scale reaching hundreds of billions of yuan in the next year, Yicai.com reported citing analysts. In the past year as of Sept 21, listed companies have announced a total CNY373.4 billion of entrusted wealth management, according to data by Choice Terminal. Currently, the one-year fixed deposit interest rate has dropped to 0.95%, while the average annualised yield of bank wealth management products has reached 2.12%, coupled with the general rise in major stock market indices, the newspaper said noting the significant yield gap. Investors are also increasingly adopting overseas wealth management through QDII and Southbound Connect, the newspaper added.