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"A longer timeframe shows that foreign investors have been net sellers of Japanese equities by a considerable margin. We think long-term investors remain lightly positioned," they wrote last week in a note "Upside risks in Japanese equities". Non-residents sold nearly $4 billion of Chinese stocks in April, according to the Institute of International Finance, the first outflow in six months. Bank of America's monthly fund manager surveys show that "long" Chinese equities was the most crowded global trade in January. That has been scaled back significantly and investors have reduced their net overweight position in Chinese stocks, but they are still comfortably net overweight.

☆ China's yuan falls below a key dollar level for the first time this year as the economy's rebound sputters
▼ + stars: | 2023-05-17 | by ( Filip De Mott | ) www.businessinsider.com time to read: +2 min

That's the first time this year that China's currency undercut that key psychological level. The yuan has fallen more than 4% from a January high as hopes for a big post-pandemic rebound fade. In previous situations where the yuan weakened past the threshold, China responded with sharp intervention. The yuan's slump also comes as China is placing increased effort on promoting the currency in global trade. But seeing the recent drop, exporters are holding onto their dollars, in case the yuan keeps falling, according to Bloomberg.

☆ China expands de-dollarization push as global central banks use record amount of yuan
▼ + stars: | 2023-05-16 | by ( Filip De Mott | ) www.businessinsider.com time to read: +2 min

That's as central banks want to move away from the dollar, and deal with domestic difficulties. These are arrangements that allow central banks to exchange one another's currencies, guaranteeing to return the money for the same exchange rate at a future date, with interest. The yuan's increased use may also indicate a global de-dollarization swing, as many central banks are moving away from reliance on the greenback. The PBOC did not make public which central banks relied on the swap lines in the first quarter. Meanwhile, the US has standing currency swap agreements with five national banks in Canada, England, Japan, Switzerland and Europe.

☆ China holds rates, adds more liquidity as recovery struggles
▼ + stars: | 2023-05-15 | by ( ) www.reuters.com time to read: +3 min

The People's Bank of China (PBOC) said it was keeping the rate on 125 billion yuan ($18.08 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.75% from the previous operation. Monday's operation was meant to fully meet financial institutions' needs and to "maintain reasonably ample banking system liquidity," the PBOC said in an online statement. In a Reuters poll of 30 market watchers conducted last week, 26 participants, or 86.7%, predicted no change to the MLF rate, while four respondents expected a marginal rate cut. With 100 billion yuan worth of MLF loans set to expire this month, the operation resulted in a net 25 billion yuan fresh fund injection into the banking system. The central bank also injected 2 billion yuan through seven-day reverse repos while keeping borrowing costs unchanged at 2.00%, it said in an online statement.

The consumer price index (CPI) in April rose 0.1% year-on-year, the lowest rate since February 2021, and cooling from the 0.7% annual gain seen in March, the National Bureau of Statistics (NBS) said. Reuters GraphicsPBOC TESTEDOverall inflationary pressures remain low with the core consumer inflation, which excludes volatile food and energy prices, up 0.7%, unchanged from the previous month. The statistics bureau attributed the weaker consumer inflation to the base effect. Vegetable prices extended their decline to 13.5% and pork, a major driver of CPI, slowed its price growth to 4.0% from 9.6% in March. "Securing income growth and improving consumer confidence remain key policy priorities for delivering a more sustainable consumption recovery," said Pang.

☆ Consumer prices in China rose 0.1% in April, the slowest rate in two years
▼ + stars: | 2023-05-11 | by ( Jihye Lee | ) www.cnbc.com time to read: +1 min

The People's Bank of China (PBOC) building in Beijing, China, on Tuesday, April 18, 2023. Source: BloombergChina's consumer price index rose 0.1% in April year-on-year, the slowest since early 2021. Economists surveyed by Reuters expected to see consumer prices rise 0.4% from a year ago and remain unchanged from the previous month. Inflation in China was led by food and services, according to the National Bureau of Statistics – food prices rose by 0.4% and service prices rose 1% from a year ago. That's a stark contrast to the latest U.S. inflation data overnight which showed consumer prices rose 4.9% in April – easing in the wake of the Federal Reserve's efforts to tame inflation by hiking rates 10 consecutive times.

☆ China's deflation worries deepen as consumer prices rise only 0.1% in April
▼ + stars: | 2023-05-11 | by ( Laura He | ) edition.cnn.com time to read: +3 min

The producer price index, which measures factory-gate prices, declined by 3.6%, marking the biggest contraction in three years. The weak property sector recovery likely has exerted “persistent” downward pressure on the factory-gate prices, they added. A slump in the property sector affects demand for key raw materials such as steel and cement, which are key parts of the producer price index. Producer deflation will likely deteriorate, with the PPI expected to drop further by 3.9% on falling global commodity prices. Deflation is bad for the economy because, in such an environment, consumers and companies may put off spending in anticipation of prices falling further, which would only exacerbate economic problems.

☆ China has an inflation problem. It’s way too low
▼ + stars: | 2023-04-24 | by ( Laura He | ) edition.cnn.com time to read: +6 min

That’s raising the specter of a tailspin of falling prices and wages from which the economy may struggle to recover. “Our core view is that China’s economy is deflationary,” wrote Raymond Yeung, chief economist for Greater China at ANZ Research, last week, soon after China released its first-quarter GDP growth figures. Instead of spending money, people are hoarding cash at a record rate. “Even with a conservative estimate, 500 billion yuan in consumption vouchers will drive one trillion yuan in overall consumption, ” Li said in a video posted on his Weibo social media account on Tuesday. In return, the government could receive at least 300 billion yuan through taxes generated by the increase in spending, he said“So it only takes 200 billion yuan in spending for the central government to drive one trillion yuan in consumption,” he said.

☆ China’s central bank expects ‘U-shaped’ recovery in consumer prices
▼ + stars: | 2023-04-20 | by ( Evelyn Cheng | ) www.cnbc.com time to read: +1 min

Workers at a factory making lithium battery products for domestic and international markets in Nantong, Jiangsu province, China. BEIJING — The People's Bank of China said Thursday it expects consumer prices to pick up this year, and that the central bank is not expecting inflation or deflation to become a significant problem for China. China's consumer price index hit an 18-month low in March, and rose 0.7% year-on-year. Zou added that in the medium to long term, China's economy has no basis for an inflationary or deflationary trend. He claimed that's because demand and supply in China's economy are even, and monetary policy is "reasonable."

☆ China keeps lending benchmarks unchanged amid signs of recovery
▼ + stars: | 2023-04-20 | by ( ) www.reuters.com time to read: +2 min

SHANGHAI/SINGAPORE, April 20 (Reuters) - China kept its benchmark lending rates unchanged for the eighth straight month on Thursday in line with expectations, as the economic recovery reduced the need for any immediate monetary support. The one-year loan prime rate (LPR) was kept at 3.65%, while the five-year LPR was unchanged at 4.30%. The medium-term lending facility (MLF) rate now serves as a guide to the LPR. Markets mostly use the medium-term policy rate as a indication of likely changes to the lending benchmarks. "There might be cuts to deposit rate and 5-year LPR, so as to lower funding costs and support long-term business loans."

☆ China's c.bank official says no basis for long-term deflation
▼ + stars: | 2023-04-20 | by ( ) www.reuters.com time to read: +1 min

BEIJING, April 20 (Reuters) - A recovery in Chinese consumer demand needs time to pick up due to the "scarring effect" of COVID-19, but there is no basis for any long-term deflation, an official from the People's Bank of China (PBOC) said on Thursday. Despite the bounce in growth, consumer price inflation is slowing sharply and factory gate prices are in freefall. The PBOC expected consumer price inflation to pick up later this year, but there is no basis for sustained deflation or increases in inflation in China, Zou Lan, head of the monetary policy department at PBOC, told a news conference in Beijing. Amid the global economic recession jitters, Zou said the PBOC will continue to implement prudent monetary policy. Ruan Jianhong, spokesperson of the PBOC, expected household loan demand to steadily increase.

☆ China regulators plan new bond market rules, will coordinate more after turmoil, sources say
▼ + stars: | 2023-04-20 | by ( ) www.cnbc.com time to read: +3 min

"After the chaos, coordination between bodies will be strengthened," one of the regulatory sources said. Turnover in the market — the world's second-largest bond market with $21 trillion in notes outstanding — slid and traders said they had to scramble to chat groups for quotes. In contrast to the pre-ban market, Tullet Prebon's data is now available on all other bond market information platforms including Wind, Dealing Matrix and government-affiliated iDeal. China's interbank bond market operator also said on March 20 that iDeal now offers price data from six interdealer brokers. The strength of the market's reaction to the data ban had surprised authorities, according to one of the regulatory sources.

☆ China may hold lending benchmarks steady as recovery remains on track -analysts
▼ + stars: | 2023-04-19 | by ( ) www.reuters.com time to read: +2 min

SHANGHAI/SINGAPORE, April 19 (Reuters) - China is widely expected to stand pat on lending benchmarks at the monthly fixing on Thursday, a Reuters survey showed, as economic recovery has been well on track - as seen from better-than-expected first-quarter data. China's economy grew at a faster-than-expected pace in the first quarter, reducing the urgency for authorities to ease monetary policy to aid recovery, traders and economists said. The loan prime rate (LPR), which banks normally charge their best clients, is calculated each month after 18 designated commercial banks submit proposed rates to the People's Bank of China (PBOC). In a poll of 30 market watchers, 27 predicted no change to either the one-year LPR or five-year tenor . The interest rate on medium-term lending facility (MLF) loans serves as a guide to the LPR.

☆ Analysis: China's 'atypical' deflation cycle gives central bank a headache
▼ + stars: | 2023-04-19 | by ( Kevin Yao | ) www.reuters.com time to read: +5 min

China GDP"China is entering an 'atypical' deflation cycle, which means deflation amid economic recovery," said Jinyue Dong, senior economist at BBVA research. China's new bank lending hit an all-time high in the first quarter. The central bank cut lenders' reserve requirements ratio (RRR) for the first time this year in March. But analysts say that is largely due to last year's low base caused by COVID-19 curbs that hit consumers the hardest, rather than underlying household demand. Reuters GraphicsNew household loans, mainly mortgages and consumer loans, accounted for 16% of total new loans in the first quarter, despite a jump in mortgages in March, while corporate loans made up for the rest.

Unlike a growing number of central banks in Asia who have pressed the pause button or are close to doing so, the BoE and ECB are both expected to continue raising rates in their battle to get inflation back down towards target. St Louis Fed president James Bullard is much more hawkish though, as he confirmed in an interview with Reuters. The central banks of Australia, Indonesia, India, Singapore and South Korea have all paused, and the Philippine central bank governor signaled a pause in May. But the road ahead looks bumpy, and other indicators for March were mixed - retail sales smashed forecasts, but investment fell short. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Unlike a growing number of central banks in Asia who have pressed the pause button or are close to doing so, the BoE and ECB are both expected to continue raising rates in their battle to get inflation back down towards target. St Louis Fed president James Bullard is much more hawkish though, as he confirmed in an interview with Reuters. The central banks of Australia, Indonesia, India, Singapore and South Korea have all paused, and the Philippine central bank governor signaled a pause in May. Research from the Bank for International Settlements shows that the global tightening cycle since the start of last year is the most synchronized and strongest over the past 50 years, with more than 95% of central banks raising their policy rates. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Fed Chair Powell meets Chinese counterpart Yi Gang
▼ + stars: | 2023-04-14 | by ( Evelyn Cheng | ) www.cnbc.com time to read: 1 min

BEIJING — The heads of the U.S. and Chinese central banks met in Washington, D.C., on Tuesday, the People's Bank of China said in a statement Friday. PBoC Governor Yi Gang and U.S. Federal Reserve Chair Jerome Powell "exchanged views" on China-U.S. economic and financial trends, the statement said, according to a CNBC translation. The meeting of the Fed and PBoC heads comes as political tensions between the world's two largest economies have escalated and limited high-level interactions. Yi was attending the spring meetings of the International Monetary Fund and World Bank in D.C., the PBoC statement said. The U.S. Federal Reserve and IMF did not immediately respond to a CNBC request for comment outside of local business hours.

☆ Morning Bid: Asia stocks bounce as dovish central banks lift the mood
▼ + stars: | 2023-04-11 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Kevin Buckland. The local stock price reaction was muted though: Hong Kong's Hang Seng was up 0.9% while mainland benchmarks were flat. Bitcoin, meanwhile, soared as high as $30,438 in Asia for the first time in 10 months, smashing out of recent ranges. Europe returns to trading with very little on the economic calendar aside from euro zone retail sales for February and the Sentix business survey. Reuters Graphics Reuters GraphicsKey developments that could influence markets on Tuesday:Sentix indexEuro zone retail salesFirst Republic financial resultsReporting by Kevin Buckland; Editing by Edmund KlamannOur Standards: The Thomson Reuters Trust Principles.

☆ China's consumer, factory prices skid as demand falters
▼ + stars: | 2023-04-11 | by ( Reuters Staff | ) www.reuters.com time to read: +4 min

REUTERS/Tingshu WangIn contrast to surging prices globally, China’s retail and producer inflation has remained anaemic as the consumer and industrial sectors struggle to recover from their pandemic hit. Analysts now think consumer inflation could fall short of Beijing’s official targets this year. On a month-on-month basis, food prices fell 1.4%. GRAPHIC: China's inflation skids, hereFALLING SHORTThe government has set a target for average consumer prices in 2023 to be about 3%. “We think consumer price inflation will rebound in the coming months as the labour market tightens again and will peak at 2.3% in early 2024,” said Zichun Huang, China economist at Capital Economics.

☆ Smaller Chinese banks cut deposit rates on squeezed margins
▼ + stars: | 2023-04-11 | by ( ) www.reuters.com time to read: +3 min

BEIJING, April 11 (Reuters) - Several small and mid-sized banks in China have lowered their deposit interest rates, a move that could help ease costs as loan growth faces more pressure amid rising economic risks. "But the costs of liabilities of banks remain relatively rigid, and net interest margins continue to shrink, which added to their operating pressures," he said. Nicholas Zhu, a banking analyst at Moody's, said smaller banks' pricing changes usually follow larger banks' initiatives with a time lag. In September, China's largest banks lowered deposit rates in their first broad-based move since 2015 to ease margin pressure. Lower deposit rates could also help ease banks' margin pressures at a time when investors have raised their hopes for a cut in lending rates to prop up the economy.

☆ China's central bank calls for stronger defences against financial crisis
▼ + stars: | 2023-04-02 | by ( ) www.reuters.com time to read: +1 min

BEIJING, April 2 (Reuters) - China should accelerate legislation of the Financial Stability Law and improve other legal arrangements designed to prevent and dispose of financial risks, three officials from the People's Bank of China (PBOC) wrote in China Finance, a publication affiliated to the central bank. Financial authorities should strengthen supervision of financial institutions' date accuracy to prevent risks, the article said, saying if any enlightment should be drawn from the Silican Valley Bank crisis. China should also let the insurance deposit system play its full role, allowing the mechanism to deal with problematic banks in a swift and orderly manner, so as to effectively prevent systematic risks, said the authors, who are from PBOC's Financial Stability Bureau and the Deposit Insurance Corp.China's commercial banks as a whole are sound and stable, the article said. The authors said China should consolidate the capital reserves for dealing with financial risks to ensure that there are sufficient resources to dispose risks in a timely manner. Reporting by Sophie Yu, Brenda Goh Editing by Raissa KasolowskyOur Standards: The Thomson Reuters Trust Principles.

☆ Belt and Road Initiative: China spending billions to bail out megaproject's debtors
▼ + stars: | 2023-03-28 | by ( Jessie Yeung | ) edition.cnn.com time to read: +6 min

For one, China’s loans are far more secretive, with most of its operations and transactions concealed from public view. The PBOC requires an interest rate of 5%, compared to 2% for IMF rescue loans, the study said. There is also public concern in some countries over issues like excess debt and China’s influence. Accusations that Belt and Road is a broad “debt trap” designed to take control of local infrastructure, while largely dismissed by economists, have sullied the initiative’s reputation. In January, Chinese Foreign Minister Qin Gang rejected the accusations of China creating a “debt trap” in Africa, a major recipient of Belt and Road investments.

REUTERS/Thomas Suen/File PhotoJOHANNESBURG, March 28 (Reuters) - China spent $240 billion bailing out 22 developing countries between 2008 and 2021, with the amount soaring in recent years as more have struggled to repay loans spent building "Belt & Road" infrastructure, according to a study published Tuesday. People's Bank of China (PBOC) swap lines accounted for $170 billion of the rescue financing, including in Suriname, Sri Lanka and Egypt. China's rescue lending is "opaque and uncoordinated," said Brad Parks, one of the report's authors, and director of AidData, a research lab at William & Mary College in the United States. China is negotiating debt restructurings with countries including Zambia, Ghana and Sri Lanka and has been criticised for holding up the processes. In response, it has called on the World Bank and International Monetary Fund to also offer debt relief.

JOHANNESBURG, March 27 (Reuters) - Multilateral development banks (MDBs) reluctant to offer debt relief need to shoulder an "equitable burden" in sovereign debt restructurings, a People's Bank of China official said on Monday. But with countries such as Zambia, Sri Lanka and Ghana having defaulted, China has faced criticism for holding up the debt restructuring processes. Jin also said that removing investments in "productive assets" from debt stock calculations in debt restructuring situations "should be encouraged". He acknowledged diverging opinions within China about debt restructuring, which he attributed partly to a lack of experience. "At most 15 years ago, in the multilateral forums China was always on the side of the borrowing countries," Jin said.

Aerial view of shipping containers sitting stacked at Yangshan Deepwater Port, the world's biggest automated container terminal, on May 21, 2021 in Shanghai, China. Policy support"China could at least be a relative 'safe haven' given its growth premium, financial soundness, policy discipline and the new political economy cycle," Citi economists said. The RRR is a measure of how much cash banks in China need to have on hand. Since the pandemic started, mainland China has kept relatively easy monetary policy while not announcing major stimulus packages — such as large cash handouts to consumers. "With the unintended and undesirable from aggressive interest rate hikes surfacing abroad, capital inflows into China could resume after the reopen trade if the recovery thesis plays out and political rerating is steadily ongoing," Citi economists wrote.

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