China Update

Boosts :

Chinese Central Bank Mulls Bank Liquidity Rule Change
People’s Bank of China is considering counting savings held by lenders for non-deposit-taking financial institutions towards bank deposits for purpose of loan-to-deposit ratio calculation, Reuters reported yesterday, citing unidentified people.
http://www.reuters.com/article/2014/12/26/us-china-banking-easing-idUSKBN0K40BX20141226

China Will Probably Scrap Housing Purchase Limits in 2015
Housing sale prices will fall about 5% next yr, Zou Linhua, a researcher at the government-backed Chinese Academy of Social Sciences said today at a press briefing releasing an annual report on housing market, according to a transcript published by China News Service’s website.
http://europe.chinadaily.com.cn/business/2014-12/27/content_19180295.htm

China Lets Brokers Offer Stock-Pledging Business on OTC Market

China to Allow Sovereign Notes Used as Margin for Bond Futures

China to Study Further Easing of QFII Criteria

China to Start MYR, RUB, NZD Forward Trading Against CNY

China May Ease Investment Rules in Free Trade Zones

 

Minuses :

China’s Industrial Profits Drop Most in Two Years Amid Slowdown

(Bloomberg) — China’s industrial profits fell the most in two years last month, the latest data to show a deepening slowdown in the world’s second-biggest economy as pressure grows on the nation’s central bank to ease monetary conditions.
http://www.bloomberg.com/news/2014-12-27/china-s-industrial-profits-drop-most-in-two-years-amid-slowdown.html

Rebar Has Biggest Weekly Loss Since September on Sluggish Demand

(Bloomberg) — Steel reinforcement-bar on Shanghai Futures Exchange -3.4% this wk, biggest weekly drop for most-active contract since Sept. 26; 2nd weekly decline.
Result :
Another week of rally in the SHCOMP bringing gains since 31 Oct to 38.5% with financials delivering big gains.
USDCNH and USDCNY looking like a short term top even with renewed expectations of a Jan 2015 rate cut. I wouldn’t expect it to close the year any higher.
Leaving with the indicative bond prices.
CNH BONDS
CNH BONDS 2