CHINA PRESS: PBOC's Shrinking Asset Scale Does Not Mean Tightening - Analysts
The shrinking scale of the People’s Bank of China’s assets demonstrates innovative monetary policy tools such as treasury trades and outright repos replacing traditional tools and not monetary tightening, China Securities Journal reported citing analysts. After the central bank released a large amount of liquidity by reducing the reserve requirement ratio, authorities will drain funds through its medium-term lending facility, while banks repay debts such as high interest MLF loans, the newspaper said citing Wang Jian, analyst at Guosen Securities. The total assets of PBOC were CNY44.1 trillion by end-2024, a decrease of about CNY1.6 trillion from end-2023.
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ASIA STOCKS: China & Hong Kong Equities Opening Slightly Lower
- China & Hong Kong equities are opening slightly lower in morning trade, although ranges are narrow. The Hang Seng is -0.30%, while CSI 300 is -0.40% with Tech & Healthcare sectors struggling the most.
- Chinese regulators plan to implement measures, including a swap facility and refinancing facility introduced by the PBOC, to stabilize the stock market. These tools are expected to inject approximately ¥400bi into the A-share market in 2025, according to strategists from CICC and CITIC Securities.
- Country Garden reported a record loss of ¥178.4b ($24.3b) amid China’s prolonged housing crisis, driven by impairments, declining margins, and weak sales. While its first-half 2024 loss narrowed to ¥12.8b, the developer faces mounting debt of ¥250b and ongoing challenges in its restructuring efforts, with a key wind-up petition hearing set for January 20. Shares remain suspended, having lost 97% of their value since 2018. Property Indices are underperforming the wider market this morning, with the Mainland Property Index -1.25%, while BBG China Property Developer Index is -0.90%.
CHINA PRESS: China M2 Increases In December
China’s M2 money supply reached CNY313.5 trillion in December, up 7.3% y/y, driven by the migration of government deposits and wealth management funds to resident and corporate deposits, according to Mingming, chief economist at CITIC Securities. Looking ahead, new credit and social financing are expected to increase y/y as authorities adopt a moderately easing monetary policy and guide financial institutions to increase credit supply, said Wang Qing, chief macro analyst at Orient Securities. (Source: Securities Daily)
CHINA PRESS: Authorities To Deepen Capital Market Reform
Authorities are expected to introduce practical guidelines aimed at reforming the M&A and restructuring market, as well as implement policies to attract pension, insurance and financial management funds to enter the capital market, Shanghai Securities News reported, citing Tian Xuan, director at the National Institute of Financial Research at Tsinghua University. The fund industry reforms will likely include reducing fund fees from investment products such as ETFs, Tian added.
