The People's Bank of China (PBoC) announced late on Friday afternoon that it will lower the reserve requirement ratio for a select group of banks next Monday. Banks eligible for the RRR cut must have extended a certain amount of inclusive finance loans to the real economy, PBoC said in a separate notice. All qualified banks will enjoy a RRR cut of 50bp-100bp. Additionally, the central bank will cut another 100bp for qualified joint-stock commercial banks. Together, the two cuts will release Rmb550bn ($78.8bn) into the market.
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Xi arrived at Wuhan, the city where the first case of Covid-19 was found in China, on Tuesday. He met with medical workers, military officers and community workers, according to state media Xinhua news.
He visited the city at a time when things are slowly starting to look up in the Mainland. Over 95% of industrial companies outside of Hubei province, of which Wuhan is the capital, have resumed operations, the deputy minister for the Ministry of Industry and Information Technology said on Friday. Around 60% of the small and medium-sized enterprises are also back to work.
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On Wednesday, officials from the PBoC and the China Securities Regulatory Commission (CSRC) said China will accelerate bond market reform to support the real economy.
Among other things, China will optimise the bond issuance management system and promote innovation, increase support for private enterprises funding through bonds, and also lend a helping hand to commercial banks and other financial institutions issuing capital bonds to increase their capital adequacy ratios.
The PBoC and the CSRC also said they will strengthen monitoring for default risks, and work on a better mechanism to deal with bond defaults.
There have been 236 coronavirus prevention bonds issued by March 10 totalling Rmb209.5bn, according to the regulators.
China will also make the bond market “more friendly and more convenient” for international investors. By the end of February, offshore issuers had raised Rmb381.6bn from Panda bonds. Some 814 foreign institutions held Rmb2.3tr of Chinese bonds, the regulators added.
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Total social financing only grew by Rmb855.4bn in February, compared with Rmb5.07tr in January, according to a monthly report published by the PBoC on Wednesday.
Outstanding renminbi bank loans grew 12.1% year-on-year, slightly lower than January’s 12.2% growth. Growth in aggregated financing remained flat at 10.7% year-on-year.
“There was likely more credit supply and demand towards the end of [February] but it was not sufficiently aggressive to compensate for the weakness earlier in the month,” Yu Song, chief China economist at Beijing Gao Hua Securities, wrote in a Wednesday note.
“We expect March credit data to be on the strong side as the impacts from the virus may gradually diminish,” he added. “This is especially so given the visit by president Xi to Wuhan which appeared to signal the government is confident that the virus has stopped spreading domestically.”
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Chinese premier Li Keqiang said in a State Council meeting on Wednesday that China will continue to open up while stabilising foreign trade. It will also work to shorten the negative list on foreign investment.
The other measures announced at the meeting include encouraging financial institutions to provide more foreign trade loans, and further defer payments for certain smaller Chinese foreign trade firms severely impacted by the outbreak.
The government will also support commercial insurance companies offer short-term export credit insurance services with lower fees. China will make sure that the recent tax and other relief measures will benefit not just domestic Chinese companies, but foreign firms in China too.
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China Consumer Price Index (CPI) inflation declined slightly by 0.2 percentage point from 5.4% in January to 5.2% in February, the National Bureau of Statistics said on Tuesday. Food price inflation rose to 21.9% in February and pork inflation to 135.2%.
“Usually, year-on-year CPI inflation drops by roughly 1.5 percentage points following the lunar new year holiday, which took place in January this year but in February last year, so the 5.2% reading in February was actually quite unusual, as it reflected the impact of the Covid-19-led supply shock on some consumer staples, especially food,” Ting Lu, chief China economist at Nomura, wrote in a Tuesday note.
Producer Price Index inflation fell to a negative 0.4% year-on-year in February from 0.1% in January, mainly led by a fall in mining and raw materials sectors.
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Bank of Jinzhou will sell a controlling stake via private placement to two government-owned entities, according to a stock exchange filing on Wednesday. The bank will raise Rmb12.09bn from the sale.
The bank will issue 6.2bn new shares at Rmb1.95 per share. After the sale is completed, Beijing Chengfang Huida Enterprise Management Co, a subsidiary of asset manager China Cinda Asset Management, will hold 37.69% of Jinzhou’s shares. Liaoning Financial Holding, a company set up by the finance department of the Liaoning provincial government, will hold 6.65%.
The shareholding of ICBC Financial Asset Investment and Cinda Investment will be diluted to 6.02% and 3.61%, respectively.
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China’s online group discounter Pinduoduo posted a 130% revenue growth in the 2019 financial year, according to the company’s financial results unveiled on Thursday.
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The number of passenger cars sold in China in February plummeted by 79% compared to a year ago, according to the Joint Advisory Committee of China Passenger Car Market (CPCA). The February 2019 sales had already seen a 19% decrease year-on-year.
Sales for January and February combined were down by 41%. The CPCA said the slump this year was due to a combination of an early Chinese New Year and the outbreak of Covid-19. It added that the Chinese automobile market was “seriously abnormal” because of the impact from the pandemic.
Data released by the China Association of Automobile Manufacturers (CAAM) on Thursday showed a similar picture. The CAAM urged policy makers to roll out measures as soon as possible to simulate consumption, including by loosening number plate quotas and restrictions on the sale of new energy vehicles.
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Industrial and Commercial Bank of China (ICBC) will bring in an official from the PBoC as its new vice president, local media Caixin reported, citing sources within the bank.
Wang Jingwu, the head of the central bank’s Financial Stability Bureau, will join ICBC once he finishes his work at the PBoC.
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Invesco, a US investment management company with $41.3bn in assets under management, launched two China A-share equity funds, according to a Wednesday press release.
The two funds – Invesco China A-share Quality Core Equity Fund and Invesco China A-Share Quant Equity Fund – will be available to institutional and retail investors in the UK and some select European countries.
This story was corrected on April 1 to reflect that all qualified banks will enjoy a 50bp-100bp RRR cut instead of 50bp as previously stated.