MNI China Daily Summary: Friday, June 14

     DATA: China's May macroeconomic indicators continued to show weakness.

Industrial output growth slowed to 5.0% y/y from April's 5.4% y/y, missing 5.4%

projected by analysts polled by MNI. Fixed-asset investment (FAI) recorded 5.6%

y/y growth in Jan-May, below 6.0% forecast and lower than the 6.1% recorded in

the first four months. Retail sales picked up on Labour Day holidays to 8.6%

y/y, rebounding from April's 16-year low of 7.2% and beating forecast 8.3%.

     LIQUIDITY: The People's Bank of China (PBOC) injected CNY100 billion via

7-day reverse repos, adding liquidity for a ninth straight day. This resulted in

a net injection of CNY100 billion given that no reverse repos matured today,

according to Wind Information. The injection aims to stabilize the liquidity

conditions at midyear, the PBOC said. The PBOC net injected CNY65 billion this

week, according to Wind Information.

     RATES: The 7-day weighted average interbank repo rate for depository

institutions (DR007) fell to 2.3500% from Thursday's close of 2.4990%, Wind

Information showed. The overnight repo average decreased to 1.5000% from

Thursday's 1.9092%.

     YUAN: The yuan weakened to 6.9236 from Thursday's close of 6.9220. The PBOC

set the dollar-yuan central parity rate weaker for a fourth day at 6.8937,

compared with 6.8934 set on Thursday.

     YUAN: Rising trade frictions are likely to trigger competitive devaluations

of currencies by many countries, Zhou Xiaochuan, former governor of the PBOC

said at the Lujiazui financial forum in Shanghai today. The Financial Stability

Board, the international body that monitors global financial system, should

focus on this issue at the G20 summit to help calm the global financial market,

Zhou said.

     BONDS: The yield on the 10-year China Government Bond was last at 3.2500%,

down from Thursday's close of 3.2700, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index decreased 0.99% to 2,881.97.

Hong Kong's Hang Seng Index fell 0.65% to 27,118.35. 

     FROM THE PRESS: Some U.S. politicians' meddling with Hong Kong's protests

against the extradition bill is a stark provocation to China, the Global Times

said in a commentary late Thursday. Influential politicians including U.S. House

Speaker Nancy Pelosi's remarks on Hong Kong affairs, describing Beijing's

willingness to trample over the law, is at odds with reality and allows Chinese

people to see the low quality of U.S. politics, the paper said.

     The outcome of the China-U.S. trade dispute, along with speculation over

the next Fed rate cut are the two main factors affecting U.S. capital markets,

Xinhua News Agency said. Although Wall Street has seen a temporary rally fuelled

by rate cut hopes, the medium-term trend remains a concern, Xinhua said, noting

limited room for rate cuts and increasing risk of a U.S. slowdown. Additionally,

U.S. stocks are still weighed by high valuations amid slowing corporate earnings

growth, Xinhua said.

     The moves to tightening mortgages by Shanghai and Tianjin authorities

indicate local housing regulations are turning to credit tightening following a

purchase limits policy earlier, the Economic Information Daily reported today.

The new policy, which requires more down payment, will dampen buyers'

willingness to purchase through borrowing, the newspaper 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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