MNI China Daily Summary: Friday, August 16
MNI (BEIJING) - EXCLUSIVE: China will see flat 4% copper consumption growth in H2 as fiscal stimulus measures counter the expected 2% demand decline driven by the property-market slump, local analysts have told MNI.
EXCLUSIVE: China’s Loan Prime Rate will likely hold steady next Tuesday amid an unchanged 7-day reverse repo rate, but sluggish credit demand and soft economic performance will likely push the central bank to ease later this year, economists told MNI.
POLICY:The People's Bank of China (PBOC) will intensify its policy efforts and maintain ample liquidity to lower funding costs, while preparing incremental measures and coordinating with fiscal polices, Governor Pan Gongsheng has told Xinhua News Agency.
LIQUIDITY:The PBOC conducted CNY137.8 billion via 7-day reverse repos, with rates unchanged at 1.70%. The operation led to a net injection of CNY124.9 billion after offsetting maturities of CNY12.9 billion , according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.8357% from 1.8306% on Thursday, Wind Information showed. The overnight repo average decreased to 1.7000% from 1.7571%.
YUAN: The currency weakened to 7.1680 against the dollar from 7.1611 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 7.1464, compared with 7.1399 set on Thursday. The fixing was estimated at 7.1742 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.1830%, down from Thursday's close of 2.2000%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index edged up 0.07% to 2,879.43, while the CSI300 index was up 0.11% to 3,345.63. The Hang Seng Index gained 1.88% to 17,430.16.
FROM THE PRESS: Retail sales in Beijing, Shanghai and Guangzhou fell 6.3%, 9.4% and 9.6% y/y in June, as the property downturn impacted residents' consumption, Caixin reported. Beijing and Shanghai saw per capita disposable income growth of 4.2% and 4.4% y/y in H1, the lowest nationwide, Caixin noted. Consumption in central regions outperformed tier-one cities due to population inflow and better balanced industries, the newspaper said.
Central government needs to directly manage household registration at city level to prevent local governments from issuing inconsistent and non-compliant rules when implementing Hukou reforms, according to Yao Yang, director at the China Center for Economic Research. According to Yao's calculations, rural residents increase consumption by 12-13% after receiving an urban Hukou. Increased urbanisation would lift the real-estate market and kick off a new round of infrastructure investment, Yao said.
July property data shows a continued downward trend and growing regional differences, according to Zhang Bo, director at 58 Anjuke Property Research Institute. The sales price of tier-one new builds fell by 0.5% month-on-month, versus falls of 0.6% and 0.7% in tier-two and three cities, the data showed. Guan Rongxue, senior analyst at Zhuge Data Research Center, noted market expectations remained weak as the housing sector showed no positive change in transaction volume and price.