MNI China Daily Summary: Friday, June 10

DATA: China's May consumer price index rose 2.1% y/y, expanding at the same pace as in April, though missing a 2.2% forecast, as sufficient food supply amid smoother logistics tamed prices, data from the National Bureau of Statistics showed. The producer price index measuring factory gate prices further eased for the seventh month to 6.4% y/y from April's 8.0% y/y, even lower than the 6.5% forecast, mainly due to a higher comparison base last year.

DATA: China's M2 money supply growth quickened to 11.1% y/y in May from 10.5% in April, outpacing the 10.2% forecast by market analysts, the fastest rate since July 2020, data released by the People's Bank of China (PBOC) showed. New loans rebounded more than expected to CNY1.89 trillion from April's more than 4-year low of CNY645.4 billion. Aggregate financing, also higher than the expected level, tripled to CNY2.79 trillion from the previous CNY910.2 billion.

LIQUIDITY: The PBOC injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.1%. This led to a net injection of CNY10 billion as no reverse repos maturing 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) decreased to 1.5728% from the 1.6154% on Thursday, Wind Information showed. The overnight repo average fell to 1.3971% from the previous 1.4092%.

YUAN: The currency strengthened to 6.6927 against the dollar from 6.6994 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 6.6994, compared with 6.6811 set on Thursday.

BONDS: The yield on 10-year China Government Bond was last at 2.7925%, down from Thursday's close of 2.7950%, according to Wind Information.

STOCKS: The Shanghai Composite Index rose 1.42% to 3,284.83, while the CSI300 index gained 1.52% to 4,238.99. Hang Seng Index edged down 0.29% to 21,806.18.

FROM THE PRESS: Banks must achieve the goal of lending to more SMEs at a faster pace this year, and further tilt credit resources to areas severely affected by the epidemic, the China Securities Journal reported citing a meeting by China Banking and Insurance Regulatory Commission. Large state-owned banks should ensure an additional CNY1.6 trillion of inclusive loans to small business throughout the year, the meeting said. Banks are still reluctant to lend to SMEs that lack collateral, guarantees and other data, the newspaper said citing Liang Si, a researcher at Bank of China Research Institute.

China’s foreign trade will continue to be supported by quickly recovered production amid eased Covid-19 curbs, increased pro-growth policies and a weaker yuan, the China Securities Journal reported citing analysts after May export growth unexpectedly rebounded by 13 percentage points to 16.9% y/y. Overseas demand was still expanding in May, and high commodity prices continued to boost payments, the newspaper said citing Zheng Houcheng, director of Yingda Securities Research Institute, adding that there is a lower comparison base on year. Congestion at the Port of Shanghai has eased rapidly since late April, the newspaper added.