MNI China Daily Summary: Friday, February 7

     BEIJING (MNI) - TOP NEWS: President Xi Jinping urged the U.S. to calmly

assess the epidemic situation and respond reasonably to the novel coronavirus

outbreak in a phone call to his counterpart Donald Trump, Xinhua New Agency

reported. Trump said the U.S. is willing to work with China to implement the

phase one trade deal signed last month and jointly advance bilateral relations,

according to Xinhua. 

     POLICY: The People's Bank of China (PBOC) will prioritise growth over other

monetary policy targets as the coronavirus adds to the challenges facing an

already slowing economy, Vice Governor Pan Gongsheng told reporters Friday,

stressing the central bank has a "very sufficient toolbox".

     DATA: China's forex reserves at the end of January was valued 0.2% higher

than a month ago to $3.1155 trillion, data by the State Administration of

Foreign Exchange (SAFE) on Friday showed. The increase was mainly due to a gain

in the dollar index and prices of major government bonds amid the China-U.S.

trade deal, Brexit, and the coronavirus outbreak, according to SAFE. The yuan

gained 1.27% against the U.S. dollar in January, Wind data showed. 

     LIQUIDITY: The PBOC skipped open market operations for the third day,

leaving liquidity unchanged, according to Wind Information. Total liquidity is

sufficient to meet market demand, the PBOC said.

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

institutions (DR007) decreased to 2.1174% from Thursday's close of 2.2092%, Wind

Information showed. The overnight repo average fell to 1.6924% from 1.7198% on

Thursday.

     YUAN: The currency weakened to 6.9860 against the dollar from 6.9696 on

Thursday. PBOC set the dollar-yuan central parity rate lower for the first time

in seven trading days at 6.9768, compared with Thursday's 6.9985.

     YUAN: The PBOC plans to issue CNY30 billion offshore bills in Hong Kong on

Feb. 13 to "enrich high credit rating yuan products and improve yuan yield

curve," it said on its website today. Included are CNY20 billion 3-month tranche

and CNY10 billion 1-year tranche issues, according to the statement.

     BONDS: The yield on 10-year China Government Bonds was last at 2.8275%,

down from Thursday's 2.8600, according to Wind Information.

     STOCKS: The Shanghai Composite Index edged up 0.33% to 2,875.96. Hong

Kong's Hang Seng Index lost 0.33% to 27,404.27.

     FROM THE PRESS: The PBOC will conduct more than CNY30 billion in rediscount

operations this year, including CNY1 billion in Q1 with 80% of the capital

raised supporting small businesses, the China Securities Journal citing unnamed

sources from PBOC. The PBOC requires interest rates on loans to companies

participating in epidemic management to be lower than 3.15%, the newspaper said.

     Private companies in Hubei province, the centre of the coronavirus

epidemic, are not facing significant debt pressures as most bonds issued are by

local government financing vehicles (LGFV), the Shanghai Securities Journal

reported citing several securities firms. About CNY41.32 billion, or 11% of the

total LGFV bonds, in Hubei mature this year, the journal said. Policy supports

to add market liquidity and ease financing issues will help dispel investor

doubts, it said.

--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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