MNI China Daily Summary: Friday, April 26

     TOP NEWS: China will make greater efforts to strengthen intellectual

property protections for foreign IP owners, eliminate forced technology

transfer, improve protection of business secrets and strictly crack down on IP

infringement, said President Xi Jinping at the opening ceremony of the Second

Belt and Road Forum in Beijing today. China will increase imports of goods and

services on a larger scale, further reduce the tariff level, eliminate various

non-tariff barriers and keep opening the Chinese market, Xi said. Also, China

will not manipulate its currency for depreciation, according to Xi.

     POLICY: The yuan may appreciate during 2019 as credit stimulus stabilises

China's economy, despite continuing headwinds, at a time when the Federal

Reserve is on pause and as trade talks with the U.S. head to a potentially

positive conclusion, a government advisor told MNI. "I am not pessimistic about

the yuan. The economy will be stable, if not rebounding strongly, which should

support the currency, particularly as China's economic performance will be more

resilient than that of the U.S.," said Zhang Bin, a senior fellow of China

Finance 40 Forum, a prominent think tank, adding that the trend will be clearer

after a deal expected by the end of June in China-U.S. trade talks.

     POLICY: China is trying to attract foreign institutional investors to raise

money for green financing initiatives in yuan, which would boost both its green

finance market and its currency internationalisation drive, Ma Jun, a member of

the People's Bank of China (PBOC)'s monetary policy committee, told MNI on the

sidelines of the Second Belt and Road Forum. "The Chinese government is

encouraging foreign institutions to issue RMB-denominated panda bonds here,"

said Ma, a leading promoter of China's green finance initiative on the global

stage, who spoke to MNI as China announced that 27 global financial institutions

had signed up to a set of green investment principles for Beijing's

continent-crossing Belt and Road infrastructure drive.

     LIQUIDITY: The PBOC skipped open market operations for the fifth trading

day, resulting in a net drain of CNY20 billion with reverse repos maturing,

according to Wind Information. Increased fiscal spending by the end of the month

can offset the maturity of reverse repos, according to the PBOC.

     RATES: The 7-day weighted average interbank repo rate for depository

institutions (DR007) fell to 2.7000% from Thursday's close of 2.8149%, Wind

Information showed. The overnight repo average decreased to 2.4700% from

Thursday's 2.7805%. 

     YUAN: The yuan strengthen to 6.7381 from Thursday's close of 6.7410. The

PBOC set the dollar-yuan central parity rate at 6.7307 today, unchanged from

Wednesday.

     BONDS: The yield on 10-year China Government Bond was last at 3.3975%, down

from Thursday's close of 3.4150%, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index fell 1.20% to 3,086.40,

dampened by the drop of pork and fuel cell shares. The Index has fallen over 5%

this week, Wind Information said. Hong Kong's Hang Seng Index increased 0.19% to

29,605.01.

     FROM THE PRESS: Housing prices in 23 out of 100 cities surveyed by the

Shanghai E-House Real Estate Research Institute have increased more than 20% y/y

in the first quarter, the Economic Information Daily reported. In some cities

the growth of mortgages and rises in house prices have occurred simultaneously,

the Daily said, while describing some areas of the market as "overheated".

Regulations on mortgages and land transactions could be further tightened in the

second quarter, the newspaper said citing Yan Yuejin, director of the E-House

Real Estate Research Institute.

     Current low interest rates and inflation are beneficial for raising funds

to boost infrastructure, reported 21st Century Business Herald citing Zhou

Xiaochuan, a former governor of the PBOC. Commercial funds should play a major

role in infrastructure construction as their involvement can ensure the

sustainability of the projects and avoid moral hazard in government investments,

the newspaper said citing Zhou.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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