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MNI China Daily Summary: Friday, June 12

     REALITY CHECK: China's retail sales look set to continue recovering in May,
supported by robust sales and strong demand for cars as the coronavirus epidemic
eases, industry insiders told MNI, although the hospitality sector is still
struggling with tourism industry only very slowly getting back to normal.
     LIQUIDITY: The People's Bank of China (PBOC) injected CNY100 billion via
7-day reverse repos Friday, with the rate unchanged at 2.2%. This resulted in a
net drain of CNY50 billion given the CNY150 billion maturing, according to Wind
Information. The injection aims to keep liquidity reasonable and ample, the PBOC
said.
     RATES: The seven-day weighted average interbank repo rate for depository
institutions (DR007) decreased to 1.9066% from Thursday's close of 1.9799%, Wind
Information showed. The overnight repo average declined to 1.5164% from the
previous 1.7529%.
     YUAN: The currency weakened to 7.0745 against the dollar from 7.0698 on
Thursday. PBOC set the dollar-yuan central parity rate higher at 7.0865 compared
with the 7.0608 set for Thursday.
     BONDS: The yield on 10-year China Government Bond was last at 2.7700%,
unchanged from the close on Thursday, according to Wind Information. 
     STOCKS: The Shanghai Composite Index was little changed to 2,9419.74. Hang
Seng Index decreased 0.73% to 24,301.38.
     FROM THE PRESS: The PBOC may cut the rate for Medium-term Lending Facility
by 5bps next Monday to stabilize market confidence, the Securities Times
reported citing an analysis by Citic Securities. The recent strength of the yuan
against appreciation gave the PBOC more room for easing and the clampdown on
high-yield bank deposits, which limits opportunities to arbitrage on itnerest
rates, may also suggest the Loan Prime Rate can be cut, the paper added.
     More mergers and acquisitions may take place in China's banking industry as
regional banks seek ways to replenish capital limited by rising bad loans due to
the outbreak, according to Shanghai Securities News citing Chang Liang, a
managing director with Citic Securities. The central bank will loosen
restrictions for regional banks to go public and allow companies and public
entities to invest in troubled banks, the newspaper reported citing an unnamed
source from a regional bank.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: archie.zhang@marketnews.com
--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]

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