Chinese Central Bank Cut Reserve Requirements to increase liquidity and stimulate the economy

 Bank of China stated that it is diminishing the reserve requirements in order to increase liquidity and stimulate the economy.

On its website, the Bank said that they're cutting the reserve requirement ratio by 50 basis points from January 6, which would release around 800 billion yuan into the economy.

This would be the eight-time the bank cuts its reserve requirements since the beginning of 2018. It would help the Chinese economy to face a possible liquidity scarcity due to rising public debt levels and increasing cash demand during the spring festival.

“Looking ahead, there’s still room for more reserve ratio cuts in 2020,” said an analyst at China International Capital Corp, “Should economic growth show more signs of stabilization and recovery after the cut, it’s likely the central bank will slow down the pace of further reserve ratio cuts,” she added.

The Chinese economy is currently growing at its slowest pace in 30 years, as it grew 6 percent in the third quarter of last year, a fact that many took as a sign of economic deceleration.

Concerning growth levels, the bank highlighted that Chinese growth remains resilient despite the high level of pressure is facing due to Trump's trade war against the big Asian economy. Both countries' negotiation teams recently announcing the signing of phase one of the trade deal, which would put an end to the trade war.

Analysts expect the Chinese government to further stimulus measures in 2020 in order to avoid stronger economic slowdown.

The institution also aims to keep a flexible monetary policy and to keep working to keep loans cheaper, as they expect the economy to keep facing pressures. It also plans to keep the yuan stable.

"The stance of prudent monetary policy has not changed," stated a bank official.

By 9:26 GMT the Chinese Yuan remained almost steady against the US dollar, gaining 0.0374 percent and hitting the 0.1437 level.

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➤ China stopped British stock due to political tensions

China stopped British stock due to political tensions

Report by Jonathan Saul for investing.com

China has temporarily blocked planned cross-border listings between the Shanghai and London stock exchanges because of political tensions with Britain.

Suspending the Shanghai-London Stock Connect scheme casts a shadow over the future of a project meant to build ties between Britain and China, help Chinese firms expand their investor base and give mainland investors access to UK-listed companies.

The sources, who include public officials and people working on potential Shanghai-London deals, all said that politics was behind the suspension.

Two of them highlighted Britain's stance over the Hong Kong protests and one pointed to remarks over the detention of a now former staff member at its consulate in Hong Kong.

All five sources have been involved in talks with Chinese officials and spoke to Reuters on condition of anonymity because they are not authorized to speak about the matter publicly.

British companies and banks involved in the scheme are watching closely how recently-elected Prime Minister Boris Johnson approaches relations with Beijing and what stance he takes on Hong Kong, which has been roiled by protests.

China blames the Hong Kong unrest, heavily supported by an anti-government movement seeking to curb controls by Beijing, on interference by foreign governments including the United States and Britain.

The China Securities Regulatory Commission and the Shanghai Stock Exchange did not respond to requests for comment. A spokesperson for the London Stock Exchange (L:LSE) and a spokeswoman for the UK's finance ministry declined to comment.

China's Ministry of Foreign Affairs said in a faxed statement that it is not aware of the specifics, but added that it "hopes the UK can provide a fair and unbiased business environment for Chinese companies that invest in the UK and create the appropriate conditions for both countries to carry out practical cooperation smoothly in various fields".

Stock Connect, which began operating last year, was devised as a way of improving Britain's relationship with the world's second biggest economy and was seen as a major step by China to open up its capital markets as well as linking them globally.

Huatai Securities was the first Chinese company to use the scheme in May, with SDIC Power set to become the second in December with a listing of global depository receipts (GDRs) in London representing 10% of its share capital.

However, the alternative energy operator's deal was postponed at an advanced stage, with SDIC Power citing market conditions as the main reason.

Five sources told Reuters SDIC Power's deal was halted because of Beijing's suspension of Stock Connect.

Other hopefuls such as China Pacific Insurance, which one of the sources said could have launched a deal as early as the first quarter of 2020, have also been told to put their cross-border listing plans on ice, they added.

SDIC Power and China Pacific Insurance did not respond to requests for comment.

"It's not only a big blow to the companies looking to broaden the investor base via listings in London, but also to China's links with global markets," one source, who has worked on one of the GDR deals, told Reuters.

Trouble with the scheme comes at a bad time for Britain, which is keen to build ties with non-European Union countries as it prepares to leave the bloc, and the LSE.

The London exchange was set for its worst year in terms of new listings in a decade as of Dec. 4, Refinitiv data showed, with political volatility and concerns over Britain's EU divorce crimping stock market fund raising.

World Economy - Top 5 news to read before 2020

Before the start of 2020, the world economy is not stable. Concerns about risks and expert's predictions about the same economic scenario in 2008.

In today's article we presented the 5 news you must know at the economic calendar by investing.com:

Trading volumes are expected to remain light due to the New Year’s break in the week ahead, reducing liquidity in the market and increasing the volatility.

Global financial markets will focus on Friday’s minutes of the Federal Reserve’s December policy meeting for further hints on the future path of monetary policy.

On the data front, the U.S. will release reports on manufacturing activity and consumer confidence, as traders look for more clues on the strength of the economy.

Meanwhile, in China, market players will be looking out for data on the country's manufacturing sector, amid lingering concerns over the health of the world's second biggest economy.

Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.

1. Global Markets Celebrate New Year’s Day

Stock markets in the U.S., Europe, UK, Switzerland, Canada, Australia, New Zealand and Japan will remain closed on Wednesday in observance of New Year’s Day.

This time of year tends to be beneficial for investors as the so-called Santa Claus rally has historically given stocks on Wall Street a short-term boost.

During the final five trading days of the year and the first two trading days of the new year, the S&P 500 has posted a 1.3% gain on average since 1950, according to the Stock Trader’s Almanac.

2. Federal FOMC Meeting Minutes

The Federal Reserve will release minutes of its December policy meeting on Friday at 2:00PM ET (19:00GMT).

The U.S. central bank held interest rates steady following its meeting on December 11, in a widely expected decision, and signaled that borrowing costs are likely to remain unchanged for some time.

New economic projections showed 13 of 17 Fed policymakers foresee no change in interest rates until at least 2021, hosing down expectations for a rate hike any time soon.

3. U.S. ISM Manufacturing PMI

The U.S. Institute for Supply Management (ISM) will publish its manufacturing survey for December on Friday at 10:00AM ET (15:00GMT), as investors look for more clues on the strength of the sector which has been hit hard by the U.S.-China trade dispute.

The data is forecast to show a slight improvement to a reading of 49.0, up from 48.1 in October.

Anything above 50.0 signals expansion, while readings below 50.0 indicate industry contraction.

The purchasing managers' index (PMI) is seen as a good indicator of economic conditions and it is even preferred by some analysts to gross domestic product, which might be affected by poor seasonal adjustment and is prone to revisions.

4. U.S. CB Consumer Confidence

In addition to the manufacturing data, the Conference Board will release its December update on U.S. consumer confidence at 10:00AM ET (15:00 GMT) Tuesday.

The consensus forecast is for a reading of 128.2, improving from 125.5 in October.

If confirmed it would be the best reading in three months.

5. Chinese Manufacturing Surveys

The China Federation of Logistics and Purchasing is to release data on December manufacturing sector activity at 01:00GMT on Tuesday, amid expectations for a modest downtick to 50.1 from a reading of 50.2 in October.

The Caixin manufacturing index, which focuses more on small and mid-sized firms, is due at 01:45GMT Thursday. The survey is expected to dip by 0.1 points to 51.7.

Under pressure from faltering domestic demand and bruising U.S. tariffs, China's economy cooled to a near three-decade low in the third quarter, pressuring Beijing to roll out more stimulus to avert a sharper slowdown.

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➤ Trade War News: China Claims Trade Optimism, Requests Sanctions Against U.S.

Larry Kudlow: U.S. exports to China to double under 'Phase One' deal

(Reuters) WASHINGTON - investing.com

U.S. exports to China will double under the so-called Phase One trade deal reached between Washington and Beijing, a top White House adviser said on Monday.

"They're ... going to double our exports to China," National Economic Council Director Larry Kudlow told Fox News Channel.

Under the trade agreement announced last week, Washington will reduce some tariffs on Chinese imports in exchange for Chinese purchases of agricultural, manufactured and energy products increasing by about $20 billion over the next two years.

While U.S. officials have touted the deal, Chinese officials have been more cautious, emphasizing that the trade dispute has not been completely settled.

U.S. President Donald Trump has said negotiations on a "Phase Two" trade deal between the two economic giants would start immediately.

U.S. Trade Representative Robert said that a date for senior U.S. and Chinese officials' signing of the accord has not yet been determined.

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➤ Trade War News: China Claims Trade Optimism, Requests Sanctions Against U.S.

Trading war alert: Oil Tumbles as US Fuel Stocks Spike.

The buildup in stocks of U.S. gasoline and other fuels isn’t slowing, to the dismay of oil bulls. Neither is there word coming on whether China will avert new U.S. tariffs by Sunday.

Oil prices fell Wednesday following the latest report on U.S. supplies that showed an unexpected rise in crude inventories and very strong refining activity that produced a huge climb in gasoline and distillate stockpiles.

U.S. West Texas Intermediate, the U.S. crude benchmark, settled down 48 cents, or 0.9%, at $58.76 per barrel.

U.K. Brent, the global oil benchmark, closed the regular New York trading session down 62 cents, or 1%, at $63.72.

Crude inventories rose by 822,000 for the week ended Dec. 6, the U.S. Energy Information Administration said. The market was looking for a drawdown of 2.76 million barrels, according to analysts’ forecasts compiled by Investing.com.

Gasoline inventories soared by 5.4 million barrels, compared with expectations for a rise of about 2.5 million barrels. That was the largest weekly build in gasoline since January, according to EIA records.

Distillate inventories, meanwhile, climbed by 4.1 million barrels, versus forecasts for a build of about 1.6 million barrels.

“It appears once again that refiners are turning out products at a frenetic pace that the market probably doesn’t need and that explains the continuous builds in gasoline and distillates that we’re having,” Investing.com analyst Barani Krishnan said.

“Refinery runs are continuing at over 90% of standing capacity,” Krishnan added. “The drawdown of nearly 3.5 million barrels at the Cushing Oklahoma delivery point for WTI clearly shows the blistering pace of refining that’s going on.”

Imports ticked up for the week to nearly 7 million barrels.

“The takeaway for oil bulls would be the first dip in production for a long time, which the EIA estimates is down to 12.8 million bpd from a previous 12.9 million,” Krishnan said. “Also, exports of crude got a huge boost of 265,000 bpd last week.”

Also weighing on oil was the U.S.-China trade wrangle and how the Trump administration would proceed come Sunday, the deadline for the imposition of tariffs on another $156 billion worth of Chinese goods.

"The 500-pound gorilla in the trading room is whether a deal can be reached with China,” Tariq Zahir, founder of New York oil-focused fund Tyche Capital Advisors, said.

“If we do not see a deal reached, or minimally a delay in imposing new tariffs, we could see a substantial risk-off posture being taken in all asset classes across the board. Imposing the new tariffs, in our opinion, would lead to a risk off across everywhere."

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➤ Aramco Stock Soars Limit Up In Debut with value $1.7 trillion.

China Capital outflows rose modestly in September Standard Chartered

Chinese economy is at the focus, as the two world huge economies are in a war. Yes, it's called the trade war. Trade war and Brexit news are the most important news for all who are interested in money and business.

Today's News:

According to analysts at Standard Chartered, escalating trade tensions weighed on market sentiment even as a soft DXY supported the Chinese yuan (CNY) for most of September.

The US and China imposed additional tariffs on each other’s goods starting from 1 September. While talks between the two sides continue on the table, the date for high-level trade talks in October as was said and arranged was not confirmed until the last week of September. Against this backdrop, non-FDI capital outflows picked up to USD 19.7bn in September from a modest USD 11.5bn in August, according to the global estimate.

FX assets held by the People’s Bank of China (PBoC) saw a small decline of USD 0.1bn, indicating that overall cross-border flows remained balanced. The merchandise trade surplus widened to USD 39.6bn in September after narrowing for two months, leading to a larger Q3-2019 surplus relative to Q2. Meanwhile, we estimate that the September services trade deficit shrank to USD 22.9bn.

According to FXS Forex news as they calculated that total net capital outflows (including net FDI inflows of USD 2.8bn) edged up by USD 7.3bn to USD 16.9bn in September / still modest compared with June (USD 31.8bn) and July (USD 20.3bn).

The latest data from the State Administration of Foreign Exchange (SAFE) shows that net FX sales picked up in September and the willingness to convert FX receipts into CNY declined.

SAFE(State Administration of Foreign Exchange) recently announced new measures to facilitate cross-border trade and investment, including simplifying administrative procedures for FX payment and receipt and removing some payment restrictions on the capital account. The measures aim to improve the business environment and attract foreign capital.

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➤Forex reserves fall to $3.092 trillion (China's September 2019)

Trade War News: China Claims Trade Optimism, Requests Sanctions Against U.S.

Always there is new about the Trade War between China and U.S. Today's news reported that China Claims Trade Optimism, Requests Sanctions Against U.S.

Chinese Vice Foreign Minister Le Yucheng told the media on Tuesday that he remains optimistic about a trade deal being reached between the United States and China, saying that “as long as we respect each other and seek equal cooperation, there are no disagreements that cannot be resolved…”The comments came shortly after China sought $2.4 billion in retaliatory sanctions against the U.S. for its failure to comply with a World Trade Organization ruling since the time Barack Obama was president. The WTO will review the case next week.

Washington officials have challenged the WTO’s ruling, which relates to tariffs on specific Chinese products including solar panels and wind towers. Washington has also been battling the WTO about its treatment of China on the global trade stage, claiming that the WTO provides better trade terms for China because it is considered a ‘developing country’. Consequently, the U.S. is aggressively trying to repeal China’s developing country status in the WTO.

Global economists have long posited that the ongoing trade war is not just harming the U.S. and China, but is having deleterious results on the greater global economy. Kristalina Georgieva of the International Monetary Fund has estimated that the trade war could lead to “global losses of around $700 billion,” while IMF Chief Economist Gita Gopinath projected earlier this month that the trade war would cause “slower growth in nearly 90 percent of the world.” The IMG forecasts international economic growth of 2.4 percent in 2020, a 0.2 percentage point decline from its April forecast.

Malaysian Prime Minister Mahathir Mohamad expressed concern that his country could be caught in the economic crosshairs earlier this week. “Economically we are linked to both markets, and physically we are also caught in between for geographical reasons,” Mahathir said. He added that he is hoping for the best and preparing for the worst by seeking new trade collaborations with other neighboring countries.

The U.S. dollar was moderately lower just after noon in Asia on Tuesday, with the dollar index trading down 0.04 percent to 97.29 .DXY as of 12:47 p.m. HK/SIN. The British pound surged against the greenback, up 0.19 percent to $1.2982, while the euro rose 0.04 percent to $1.153. The Australian dollar also gained against its U.S. counterpart, trading up 0.12 percent to $0.6874. The dollar did manage to squeeze out gains against the yen, trading up 0.03 percent to 108.61.

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Source: Daily Forex