China’s central bank drained the most funds from the financial system in six months, adding to speculation that it is keeping a tight rein on cash supply as part of efforts to curb excessive leverage.
The People’s Bank of China (PBOC) pulled a net 245 billion yuan (US$37 billion) from the financial system through reverse-repurchase agreements, the biggest one-day withdrawal since March 4.
This follows last week’s 670 billion yuan injection to meet pre-holiday demand.
The benchmark money-market rate reacted to yesterday’s open-market operations by surging the most in five months.
The PBOC has signaled that it wants to limit runaway borrowing, with Deputy Governor Yi Gang (易綱) cited as saying that the goal is to bring down leverage ratio growth.
The central bank has in the past month restarted the use of both 14 and 28-day lending tools — rather than just the seven-day tenor — for the first time since February, spurring concern that it is looking to increase the use of more expensive, longer-term funding to cool a bond rally.
Chinese markets will be closed in the week through Oct. 7.
“The PBOC’s intention to curb leverage has been obvious ever since it resumed the use of the longer-tenor reverse repos,” said Chen Long, an analyst at Bank of Dongguan Co in Guangdong Province. “The bias is toward tightening, and it doesn’t want liquidity to be too loose. But it will avoid any unintended consequence — that’s why we saw it increasing injections last week to tame money rates.”
The seven-day repurchase rate, a gauge of interbank funding availability, rose 11 basis points to 2.44 percent as of 5:35pm in Shanghai.
Exchange rates in Shanghai and Hong Kong were little changed.
POOR INTERNAL CONTROLS: Insurance Bureau Director-General Shih Chiung-hwa said the company is expected to get back on track while its chairman is suspended The Financial Supervisory Commission (FSC) yesterday fined Shin Kong Life Insurance Co (新光人壽) NT$27.6 million (US$939,415) for a reckless investment that endangered its solvency, and suspended its chairman Eugene Wu (吳東進) for poor supervision. The penalty is the second-highest in a single case after Nan Shan Life Insurance Co (南山人壽) was fined NT$30 million in September last year and its chairman Du Ying-tzyong (杜英宗) suspended for two years, the commission said. In three rounds of special and regular examinations conducted since last year, the commission found that Shin Kong Life had given too much power to an asset and liability management committee
Tesla Inc is planning to ship vehicles made at its Shanghai Gigafactory to other markets in Asia and Europe, people familiar with the matter said, as the company looks to realize its plan to reduce shipping costs and manufacture vehicles closer to customers. China-built Tesla Model 3s intended for delivery outside China would likely start mass production in the fourth quarter of the year, the people said, asking not to be identified because the details are private. They said the markets targeted include Singapore, Australia and New Zealand, as well as Europe, where customers currently have to wait for a Tesla to
Continental AG, which makes control units for Daimler AG cars, cannot pursue antitrust claims against a group of patent owners, including Qualcomm Inc, which are seeking royalties on telecommunications technology, a federal judge in Texas ruled. Avanci LLC, a licensing pool formed by Qualcomm, Nokia Oyj, Sharp Corp and other owners of patents on technology standards, is not breaching antitrust laws when it negotiates license agreements with automakers rather than the component makers, Barbara Lynn, chief district judge for the Northern District of Texas, said in dismissing the suit in a decision posted on Friday. The licensing group charges US$15 per vehicle
Nano-X Imaging Ltd, a start-up founded by Israeli investor Ran Poliakine, is joining forces with South Korean chipmaker SK Hynix Inc to build a machine that could disrupt a century-old X-ray industry. Valued at about US$2 billion after listing on the NASDAQ last month, Nano-X is seeking to transform a multibillion-dollar industry that has essentially relied on the same technology since Nobel Prize in Physics winner Wilhelm Roentgen discovered X-rays in the late 19th century. Nano-X’s device uses semiconductors instead of metal filaments to generate X-rays. The backing of SK Hynix, the world’s second-largest maker of memory chips, is a boost for