MNI China Daily Summary: Friday, February 18

LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.10% on Friday. The operation has led to a net drain of CNY10 billion after offsetting the maturity of CNY20 billion repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.0910% from the close of 1.9735% on Thursday, Wind Information showed. The overnight repo average rose to 2.1009% from the previous 1.8603%.

YUAN: The currency strengthened to 6.3265 against the dollar from 6.3366 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 6.3343, compared with 6.3321 set on Thursday.

BONDS: The yield on the 10-year China Government Bond was last at 2.7950%, up from 2.7800% of Thursday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.66% to 3,490.76, while the CSI300 rose 0.48% to 4,651.24. The Hong Kong's Hang Seng Index lost 1.88% to 24,327.71.

FROM THE PRESS: China should conduct monetary easing in the first quarter, a window before the expected rate cuts by the U.S. Federal Reserve beginning in March, which will widen differences in the two economies' policies, the Securities Daily said citing analyst Fan Ruoying of Bank of China research. China’s economy needs further monetary support given shrinking demand, supply disruptions and weakening outlook, the daily said citing economist Luo Zhiheng with Yuekai Securities.

China will fully utilize fiscal policy in stabilizing investment and boosting consumption, as the central government will increase infrastructure investment and guide private capital to invest in transportation, ecological environment and social services, wrote Minister of Finance Liu Kun in an article published in the official People’s Daily. China will advance fiscal policy efforts early this year to maintain a stable economic environment, preparing for the CPC's 20th National Congress later this year, wrote Liu.

More cities in China, especially smaller cities facing prolonged weak real estate markets, may lower the required down payment on home mortgages, with the latest move introduced in Heze city in Shandong province, the China Securities Journal reported citing analyst Chen Wenjing with China Index Academy. Heze, home to about 9 million, cut down payment requirement to 20% from 30% for first-time homebuyers, a clear easing signal by the authorities, the newspaper said citing Yan Yuejing, the director of E-house China Research and Development Institution. New home sales in Hezhe fell about 42% y/y in January, the newspaper added.