MNI China Daily Summary: Friday, April 27

     TOPS NEWS: China and the U.S. are unlikely to strike a deal when officials

from Washington are scheduled to visit Beijing soon for negotiations, a veteran

researcher at a government-managed think tank told MNI in an exclusive

interview. Mei Xinyu, a researcher at the Chinese Academy of International Trade

and Economic Cooperation under China's Ministry of Commerce, said China will be

"sober" about any outcome from the negotiations. China has already made

preparations for all possible outcomes: if the negotiations end with an

agreement, or if they do not. "The U.S. should not think China is so eager to

strike a deal in one time that they can increase threats on China," Mei said.

     DATA: Combined profits made by China's industrial companies in the first

quarter rose 11.6% from a year ago to CNY1.55 trillion, the National Bureau of

Statistics said Friday. That compared with an increase of 16.1% y/y in Jan-Feb

2018, and was the lowest increase since December 2016, when the reading was

8.5%. Among 41 industries, 25 including most mining and manufacturing had

profits rising y/y. One industry had a flat reading and 15 had profits falling.

Industrial profits for March rose only by 3.1% y/y to CNY589.75 billion,

compared with over 20% in every month last year.

     LIQUIDITY: The PBOC injected CNY40 billion by 7-day reverse repos on

Friday, which left liquidity unchanged as the same amount of reverse repos

matured today. PBOC has drained a total of CNY270 billion by OMO this week.

CFETS-ICAP's money-market sentiment index closed at 62 on Thursday, up from 56

on Wednesday.

     MONEY MARKET RATES: 7-day repo average climbed to 3.0230% from 2.9530% on

Thursday, after PBOC net injected no liquidity via its open-market operation.

The overnight repo average rose to 2.9322% from Thursday's 2.7934%.

     YUAN: The yuan gained against the U.S. dollar despite PBOC set a weaker

daily fixing. The yuan rose 0.03% to 6.3145 against the U.S. unit, compared with

the official closing price of 6.3300 yesterday. PBOC set the yuan central parity

rate at 6.3393 Friday, weaker than Thursday's 6.3283. The central bank has set

the fixing weaker for four trading days out of five this week and yuan has

dropped by over 0.8% in April against the greenback.

     BONDS: The yield on benchmark 10-year China Government Bond increased to

3.6325% from the previous close of 3.6300%, according to Wind Information.

     STOCKS: Shares rose in Shanghai, led by media companies on favorable 1Q

earning results, with Enlight Media up by close to the daily-limit 10%. The

benchmark Shanghai Composite Index closed 0.23% higher at 3,082.23. Hong Kong's

Hang Seng Index gained 0.67% to 30,210.16.

     FROM THE PRESS: Chinese Premier Li Keqiang said Thursday China is still

open for negotiations with the U.S. about trade conflicts and China values that

the U.S. wants to solve the problem through dialogues, Xinhua News Agency

reported. Only dialogues and negotiations could lead to a solution, Li said

during his meeting with U.S. Secretary of Transportation Elaine Chao. China will

further open up its market, creating opportunities for other countries such as

the U.S., Li said according to Xinhua.

     China should issue more targeted and specific property policies to regulate

the property market, curb speculation while meeting demand, the Economic

Information Daily said in a commentary. Increased property controls in March are

insufficient to help first-time buyers and families' eager to buy bigger homes

as they are also restricted by the policies, the newspaper said. Commercial

banks' hikes of mortgage rates do not support people with real demand,

tax-related property policies should be specified, the newspaper said. 

***Comment: Property controls are expected to increase. As the government

traditionally likes to issue property policies during public holidays or

weekend. Policies on differentiated mortgage rates for non-speculative home

purchasers may be rolled out around Labor Day holiday (April 29-May 1).

     The yuan may soon fall as the dollar is expected to rise, China Securities

Daily commented. The robust U.S. economic growth, increasing inflation, and

rising interest rate gaps between the U.S. and other developed countries support

the dollar rally, unidentified analysts were cited by the paper. Still, the yuan

is resilient and could maintain relatively stable in the short term, due to

China's strong fundamentals and neutral stance of monetary policy, the newspaper

said.

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

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

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