New export orders shrank for the first time since July, with the sub-index dropping to 49.8 from 50.6, indicating a softening of foreign demand.
Manufacturing employment declined to 48.7 from 49.6.
"Domestic and overseas demand was weaker than expected," says economist Li Heng. "Domestically, tight liquidity is weighing on factory output and orders," Heng added. "The economy is under some downward pressures but the slowdown remains modest...We think Q4 GDP growth should be 7.7% and the same for Q1 2014." (PR)
China's government has given its approval to five companies to list on mainland stock exchanges, thereby ending an IPO freeze of over a year.
Over 760 firms are waiting to offer stock to the public, a backlog that could drag down shares of listed companies as funds flow to the new entrants.
Authorities suspended IPOs in October last year as part of a plan to crack down on fraud, reform the system and restore confidence.
Separately, Hong Kong and China could soon sign a "mutual recognition" agreement that will allow retail investors on either side of the border to buy into funds that are based in both markets. The deal could facilitate billions of dollars of cross-border investments in shares and bonds.
Deutsche Bank last week filed to launch eight more ETFs focused on China A-Shares. The move follows last month's big opening of the db X-trackers Harvest CSI 300 China A-Shares Fund (ASHR). The new funds:
The db X-trackers Harvest China A-Shares Small Cap Fund (ASHS).
The db X-trackers Harvest China A-Shares Materials Sector Fund (ASHB).
The db X-trackers Harvest China A-Shares Technology Sector Fund (ASHK).
The db X-trackers Harvest China A-Shares Industrial Sector Fund (ASHI).
The db X-trackers Harvest China A-Shares Health Care Sector Fund (ASHV).
The db X-trackers Harvest China A-Shares Financial Sector Fund (ASHF).
The db X-trackers Harvest China A-Shares Consumer Staples Sector Fund (ASHP).
The db X-trackers Harvest China A-Shares Consumer Discretionary Sector Fund (ASHY).
Chinese local-government liabilities stood at 17.9T yuan ($2.95T) at the end of June, a major new report shows, with the number up from 10.7T yuan the last time a full audit took place in 2010.
The figure includes direct debt as well as guarantees and other potential liabilities, China's National Audit Office said.
The report comes as the country's short-term money market rates calm down after spiking earlier this month when the central bank refrained from injecting liquidity into the system as part of its efforts to rein in soaring debt. The seven-day repo rate dropped to 4.89% today from 5.1% on Friday and 8.94% a week ago.
China is likely to set a GDP growth goal of 7.5% for 2014, the same as this year, sources at a commerce ministry think tank have told Reuters.
The government expects a recovery in exports to help drive the expansion, due to stronger demand from rebounding developed economies.
Chinese leaders endorsed the target at the annual Central Economic Work Conference earlier this month even though there had been talk about reducing the goal to 7% in order to create leeway for the implementation of deep structural reforms. There have even been those who have advocated doing away with the target altogether.
China's seven-day repurchase rate has dived 3.44 percentage points to 5.4% after the People's Bank of China injected 29B yuan ($4.8B) into the money markets via regular open-market operations.
The benchmark rate had skied to 8.84% over the last five days due to the PBOC refraining from open-market activity since the start of December as part of its attempt to rein in soaring debt. Last week, the bank tried to relieve the credit squeeze with emergency provisions of cash, although to little effect until today.
"The PBOC won't change its neutral-to-tight monetary policy, but saving the market looks to be the only option now," says strategist Wei Fengchun.
The Shanghai Composite closed +0.15% and the Hang Seng +1.1%.
Deutsche's John-Paul Smith doesn't join the bullish crowd amid Beijing's push to open China's economy, instead seeing the same sort of signs which led him to call Russia's 1998 financial meltdown and market crash.
“There is potential for a debt trap in industrial companies which can trigger an economy-wide financial crisis as early as next year,” he said, issuing a bearish 2014 prediction for emerging markets. "If I am wrong on China, I am wrong on everything.” Smith also made a prescient bearish call on emerging markets for 2013, and has been a China bear ever since joining Deutsche in 2010.
“The proof will be in the implementation,” he says of Beijing's plans. “It will be very interesting to see if they really intend to go down the same ‘hard state liberal economic’ path that Russia did from 1999 to the autumn of 2003. So far, there is no indication they are prepared."
Following an uncertain beginning, the Shanghai Composite has closed up 0.2% and ended a run of nine consecutive sessions of losses, its longest losing streak since 1994. The Hang Seng finished +0.6%.
Chinese shares rose despite another spike in short-term interest rates, which had hurt stocks last week. Even though the People's Bank of China provided a further emergency injection of money on Friday, the seven-day repurchase rate was 73 bps higher at 8.94% as of the midafternoon after touching 9.8% at one stage. That's the highest level since the liquidity crunch in June.
However, market watchers say that the increase in money market rates is due to seasonal factors, which might help account for the small recovery in stocks today.
Prior to its emergency provisions of liquidity, the PBOC had refrained from injecting money into the system as it looked - and still does - to rein in soaring debt in China. This has been highlighted by a state think tank that estimates that local-government loans have almost doubled to 19.9T yuan ($3.28T) in 2010-2012. Total central and local government debt was almost 28T yuan at the end of 2012, representing 53% of GDP.
Chinese stocks have closed down for the ninth consecutive session, the worst run since 1994, amid increasing fears of another cash crunch in the short-term money markets.
The seven-day repurchase rate soared 100 bps to a six-month high of 7.6%, representing a jump of 328 bps this week.
The spike came as borrowing remained difficult despite the People's Bank of China making an emergency cash injection in the financial system yesterday after being inactive for over two weeks. The PBOC didn't provide too many details, although the amount was reported to be 200B yuan ($32.9B).
"Market participants have to be able to see it and know the quantity and tenor of liquidity assistance in order to be reassured," says HSBC's Pin Ru Tan. "If they do not, it is natural to remain cautious.
The Shanghai composite fell 2% and the Hang Seng -0.2%.
The People's Bank of China has made an emergency injection of liquidity into the country's financial system after money market rates started to rise again due to lack of action by the PBOC earlier and increasing demand for money. That led Chinese shares to fall.
The bank carried out a "short-term liquidity operation" to provide credit to banks that require more cash.
Chinese short-term money market rates are on the rise again after the central bank again refrained from injecting liquidity into the system even though demand for cash is growing because banks need it for year-end regulatory requirements.
The seven-day repo rate climbed 72 bps to 7.02% after jumping 153 bps yesterday in what was the biggest increase since the People's Bank of China engineered a mini credit crunch in June.
Borrowing costs are also rising because the government is letting market forces have a greater influence over interest rates.
The increase in rates helped drag the Shanghai Composite down 1%, while the Hang Seng dropped 1.1%. The former index has slumped 4.2% this month and 6.2% this year.
Flash manufacturing output index slipped to 51.8 in December from 52.2 in November.
Output, backlogs, input prices, new orders and new export orders were among the constituent elements to grow, while employment and output prices decreased.
The PMI reading is above the average reading for Q3, says Markit, "implying that the recovering trend of the manufacturing sector starting from July still holds up." As a result, Markit expects "China's GDP growth to stabilize at around 7.8% on year in Q4."
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