Everything You Need to Know About China's Economy on Monday (Oct. 21)
Your Daily & Trustworthy Updates on the Chinese Economy
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Good Monday! This is TIAN in Beijing.
Welcome to monitor the pulse of China's economy together with me.
DRIVING THE DAY, China cut its market-based benchmark lending rates, with the one-year loan prime rate (LPR) down to 3.1 percent from the previous 3.35 percent.
The over-five-year LPR, on which many lenders base their mortgage rates, was lowered to 3.6 percent from 3.85 percent, according to the National Interbank Funding Center.
This marks the third LPR reduction this year, forming part of the country's broader policy push to reduce financing costs, support the recovery of credit demand, and further fuel consumption and investment growth.
The reduction came after the People's Bank of China lowered the interest rate of seven-day reverse repos, a key short-term policy rate, by 20 basis points on Sept. 27, guiding the LPR to move downward.
MEANWHILE, China will intensify its support for the listing of high-quality innovative small and medium-sized enterprises (SMEs) on the Beijing Stock Exchange and the "new third board," a financing platform designed for SMEs.
This initiative is outlined in a strategic cooperation agreement signed by the Beijing Stock Exchange, the Ministry of Industry and Information Technology (MIIT), and the National Equities Exchange and Quotations during the Annual Conference of Financial Street Forum 2024 on Sunday.
According to the agreement, the three parties will enhance their coordination and collaborate in areas such as institutional synergy, company cultivation and work coordination to form a cohesive force that promotes the development of these enterprises.
They also aim to assist the enterprises in effectively utilizing capital market tools like mergers and acquisitions, restructuring, and equity incentives to achieve high-quality development.
So far, China has cultivated about 141,000 innovative SMEs that use specialized, sophisticated technologies to produce novel or unique products, including 14,600 "little giant" firms, according to data from the MIIT.
ALSO ON MONDAY, Passenger throughput at Beijing Daxing International Airport reached 40.01 million this year as of Sunday, up 28.1 percent from the same period last year, the airport said.
It was the first time that the airport witnessed its annual passenger throughput exceed 40 million since it kicked off operations on Sept. 25, 2019.
As of Sunday, some 262,100 flights had departed from or arrived at the airport in 2024.
By the end of September, 43 domestic and international airlines had operated a total of 216 air routes from Daxing airport, connecting 197 destinations.
IN TODAY'S FINANCIAL MARKET,
Chinese shares close higher Monday
Chinese stocks closed higher on Monday, with the benchmark Shanghai Composite Index up 0.2 percent to 3,268.11 points.
The Shenzhen Component Index closed 1.09 percent higher at 10,470.91 points.
The combined turnover of the Shanghai and Shenzhen bourses reached almost 2.2 trillion yuan (about 309.94 billion U.S. dollars) -- up from 2.1 trillion yuan recorded on the previous trading day.
Stocks related to aircraft manufacturing and ceramics led the gains, while those in the financial sector suffered major losses.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, gained 0.69 percent to close at 2,210.34 points on Monday.
China's benchmark interbank gold prices higher Monday
According to the China Foreign Exchange Trade System, the benchmark price for gold that is 99.95 percent pure or above stood at 620.21 yuan (about 87.4 U.S. dollars) per gram, 9.09 yuan higher than the previous trading day.
The price for gold that is 99.99 percent pure or above went up 4.17 yuan from the previous trading day to 616.83 yuan.
Chinese yuan strengthens to 7.0982 against USD Monday
The central parity rate of the Chinese currency renminbi, or the yuan, strengthened 292 pips to 7.0982 against the U.S. dollar Monday, according to the China Foreign Exchange Trade System.
In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.
Hong Kong's Hang Seng Index closes 1.57 pct lower
Hong Kong's stock market ended lower Monday with the benchmark Hang Seng Index down 1.57 percent to close at 20,478.46 points.
The Hang Seng China Enterprises Index fell 1.76 percent to end at 7,340.56 points, and the Hang Seng Tech Index fell 2.37 percent to end at 4,491.9 points.
China's central bank conducts reverse repos Monday
China's central bank conducted 208.9 billion yuan (about 29.4 billion U.S. dollars) of seven-day reverse repos at an interest rate of 1.5 percent Monday.
The move aims to keep liquidity reasonable and ample in the banking system, the central bank said.
A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.
AT THE END OF TODAY'S SHARING, LET'S TAKE A LOOK AT YOUR DAILY FUTURES:
Cotton futures closed lower Monday in daytime trading on the Zhengzhou Commodity Exchange (ZCE).
The most active cotton contract for January 2025 delivery lost 30 yuan (about 4.23 U.S. dollars) to close at 14,020 yuan per tonne.
On Monday, the total trading volume for six listed cotton futures contracts on the ZCE was 320,859 lots with a turnover of 22.52 billion yuan.
Sugar futures closed lower Monday in daytime trading on the Zhengzhou Commodity Exchange.
The most active sugar contract for January 2025 delivery lost 9 yuan (1.27 U.S. dollars) to close at 5,840 yuan per tonne.
On Monday, the total trading volume for six listed sugar futures contracts on the ZCE was 264,981 lots with a turnover of 15.47 billion yuan.
Iron ore futures closed higher on Monday in daytime trading at the Dalian Commodity Exchange.
The most active iron ore contract for January 2025 delivery gained 11 yuan (about 1.55 U.S. dollars) to close at 769.5 yuan per tonne.
On Monday, the total trading volume of 12 listed iron ore futures contracts on the exchange was 440,116 lots, with a turnover of about 33.69 billion yuan.
No.1 soybean futures closed lower on Monday in daytime trading at the Dalian Commodity Exchange.
The most active No.1 soybean contract for January 2025 delivery dipped 4 yuan (about 56 U.S. cents) to close at 3,962 yuan per tonne.
On Monday, the total trading volume of six listed No.1 soybean futures contracts on the exchange was 103,310 lots, with a turnover of about 4.1 billion yuan.
About the Newsletter:
Ran by TIAN Dongdong, this newsletter features daily and trustworthy content on China's economy. Having worked in Brussels, London, Cairo, and Tripoli for Chinese media as correspondent for several years, TIAN is now based in Beijing.