MNI China Daily Summary: Friday, March 16

     TOP NEWS: Property sales in Beijing in the first two months measured by

square meters slumped by 58.3% y/y, according to data released by the Beijing

branch of the National Bureau of Statistics. Sales of residential homes in

Beijing in Jan-Feb slumped by 55.1% y/y. Housing starts in Beijing in Jan-Feb

dropped by 53.8% y/y. 

     POLICY: Bankers are more confident about China's economic outlook,

according to the results of a quarterly survey of bankers at about 3,200 bank

branches by the People's Bank of China. The survey, published Thursday, found

that more Chinese bankers think monetary policy has been tightened, with 26.7%

believing that to be the case, 4.6 percentage points higher than in the previous

quarter. Nearly 73.2% believe monetary policy is "appropriate," 5.4 percentage

points lower than the previous quarter

     LIQUIDITY: The People's Bank of China injected CNY327 billion by 1-year

Medium-term Lending Facilities (MLF) loans on Friday with the rate unchanged at

3.25%. Net injection of CNY137.5 billion as a total of CNY189.5 billion of MLF

loans matures and no reverse repo matures today. This week, PBOC has injected a

net of CNY377.5 billion via open market operations. CFETS-ICAP's money-market

sentiment index closed at 35 on Thursday, down from 39 at Wednesday's close

     MONEY MARKET RATES: The average 7-day repo rate dropped to 2.8035% from

2.8705% on Friday, after PBOC net injected CNY137.5 billion via its open-market

operations. The overnight repo average decreased to 2.5658% from Thursday's

2.6149%.

     RATES: The Ministry of Finance sold CNY20 billion in 30-year treasury bills

at a yield of 4.2200% via auction on Friday. The yield was lower than 4.2633%

for bonds with the same maturity trading in the secondary market Thursday.

     RATES: The Ministry of Finance sold CNY10 billion 91-day treasury bills at

3.0420% in an auction on Friday. That compares with the 3.1523% rate on bonds

with the same maturity in the secondary market on Thursday.

     YUAN: The yuan fell against the U.S. dollar after the PBOC set a weaker

daily fixing. The yuan fell 0.08% to 6.3243 against the U.S. unit, compared with

the official closing price of 6.3221 yesterday. The PBOC set the yuan central

parity rate vs the U.S. dollar weaker for the first time this week at 6.3340 on

Friday, compared with Thursday's 6.3141.

     BONDS: The yield on benchmark 10-year China Government Bond was last at

3.8200%, down from the previous close of 3.8250%, according to Wind Information.

     STOCKS: Shares dropped in Shanghai, led lower by coal miner shares, with

Yang Quan Coal Industry down by 4.8%. The benchmark Shanghai Composite Index

closed down 0.65% at 3,269.88. Hong Kong's Hang Seng Index was down 0.42% to

31,409.49.

     FROM THE PRESS: China's liquidity condition may tighten later this month,

China Securities Journal reported Friday citing market participants. So far in

the first quarter, money market liquidity tends to be "loose and balanced," the

Journal said. As the U.S. Fed is about to announce its decision on U.S.

benchmark interest rate, the People's Bank of China may increase rates by open

market operation. Banks are also facing higher pressure as quarter-end

macro-prudential assessment is approaching, thus the current loose money supply

will likely end, the paper added.

     China's banking regulators are forcing banks to sell their high-risk assets

through legal markets such as the Beijing Financial Assets Exchange, China

Securities Journal reported Friday. Regulators have punished those that wanted

to keep these riskier but high-return assets by only temporarily moving them off

their balance sheets to meet regulatory requirement, the Journal said.

Regulators recently have clamped down on such illegal practices, the Journal

said. 

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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