The PBOC pumps CNY120b into China’s banking system


This comes amid a debt crisis at China Evergrande (3333 HK) that is roiling global markets
Newsfeed23 Sep 2021
    Photo credit: AFP Photo


    MAINLAND CHINA & HONG KONG

    China’s central bank boosted its gross injection of short-term cash into the financial system after concern over a debt crisis at China Evergrande Group (3333 HK) roiled global markets.

    The People’s Bank of China (PBOC) pumped CNY120b (USD18.6b) into the banking system through reverse repurchase agreements, resulting in a net injection of CNY90b. That matches the amount seen on Friday (17 September), and was just below that of Saturday. Sentiment was also boosted after Evergrande’s onshore property unit said it plans to repay interest due Thursday on its local bonds.

    The need to calm market jitters is pressing amid losses in China-related equities worldwide over recent days amid concern over Evergrande’s debt woes. The benchmark CSI 300 Index fell as much as 1.9% Wednesday after the Hang Seng China Enterprises Index – a gauge of Chinese shares traded in Hong Kong – slid the most in two months on Monday. Losses came even as Wall Street analysts sought to reassure investors that Evergrande would not lead to a Lehman moment.

    China’s cash operations have been aimed at striking a balance between spurring growth hurt by fresh virus outbreaks and tighter regulations, while preventing asset bubbles. Authorities tend to loosen their grip on liquidity towards quarter-end due to increased demand for cash from banks for regulatory checks. Lenders also need to hoard more funds ahead of the one-week holiday at the start of October.

    Uncertainty over how financial troubles at China’s largest property developer – with CNY300b of liabilities – would be resolved has swelled as the authorities have refrained from providing any public assurances on a state-led resolution. China’s slowing economy has compounded investor angst. Still, many analysts say the Evergrande crisis is not likely to become a Chinese version of the Lehman collapse. – Bloomberg News.

    On Wednesday, the Shanghai Composite Index gained 0.40% to 3,628.49. Hong Kong markets were closed for National Day.

     

    REST OF ASIA

    India’s biggest electric scooter maker has called for the nation to end sales of gasoline-powered two wheelers by 2027 to speed up a switch to clean vehicles that has fallen behind other countries like China.

    India’s shift to electric vehicles (EV) has been hampered by high prices and a lack of charging infrastructure. Whereas China accounts for 97% of the world’s e-scooter fleet, they make up less than 1% of total sales in India, according to BloombergNEF. Replacing gasoline two-wheelers is key to tackling some of the world’s most toxic air because they are more polluting than cars, yet comprise 75% of the 296m vehicles on the nation’s roads as of 2019.

    Hero Electric is planning to invest INR7b to expand its capacity fivefold to 500,000 units annually. The New Delhi-based company is installing charging stations across India to improve the EV ecosystem and plans to expand its international presence by exporting to Europe and Latin America, Munjal said. – Bloomberg News.

    Australia’s S&P/ASX 200 Index upped 0.81% to 7,355.70 on Wednesday (23 September) morning, adding to its previous gain of 0.32% to 7,296.90.

    South Korea’s Kospi Index fell 0.55% to 3,123.26 in early-Wednesday trading.

    The Taiwan Stock Exchange Weighted Index tumbled 2.03% to 16,925.82.

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