Investment Daily Note

Market Highlights

    Yi Gang, Vice-Governor of People’s Bank ofChina (PBOC) said yesterday that long-term goal of China’s exchange rate policy is a “clean float” involving minimal intervention, though he mentioned that the current regime is still a managed float. As Renminbi (RMB) is included into Special Drawing Rights (SDR) basket, we expect less PBOC intervention in foreign exchange market, and RMB still has depreciation pressure in the coming year.

    According to China Business News, Central Government may introduce tax allowance on mortgage interest repayment, i.e. interest payment on mortgages would be deductible from taxable income, which could save buyers mortgage interest by 15% to 45%. Coupled with 100 cities around the country seeing newly completed residential property prices rise by 0.46% MoM, Chinese property stocks are supported by both policy and statistics.