MNI China Daily Summary: Friday, September 6

MNI (BEIJING) - EXCLUSIVE: Sliding Chinese iron ore prices should stabilise around USD80-90 a tonne within the year, as steel demand rebounds during the September-October peak season, local analysts told MNI.

POLICY: China should move immediately to fight deflationary pressures via an accommodative monetary policy and a proactive fiscal stance to address economic growth, said Yi Gang, former governor of the People’s Bank of China (PBOC), at the 2024 Bund Summit.

LIQUIDITY: The PBOC conducted CNY141.5 billion via 7-day reverse repos, with the rate unchanged at 1.70%. The operation led to a net injection of CNY111.4 billion after offsetting maturities of CNY30.1 billion, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6890% from 1.7108% on Thursday, Wind Information showed. The overnight repo average increased to 1.7186% from 1.5899%.

YUAN: The currency strengthened to 7.0882 against the dollar from 7.0995 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.0925, compared with 7.0989 set on Thursday. The fixing was estimated at 7.0921 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.1375%, up from Thursday's close of 2.1225%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index edged down 0.81% to 2,765.81, while the CSI300 index was down 0.81% to 3,231.35. The Hang Kong Exchange announced this morning the securities and derivatives markets would be suspended today due to the Typhoon warning.

FROM THE PRESS: China’s anti-dumping investigation into EU brandy will continue despite the recent decision not to impose provisional tariffs, said He Yongqian, spokesperson for the Ministry of Commerce. Looking ahead, authorities will make an objective and fair final ruling after conducting on-site checks and other investigation work, He noted. Regarding the U.S.’s recent decision to delay announcing further 301 tariffs, He said the majority of public comments received by the Office of the United States Trade Representative were opposed to the expansion of duties on Chinese products.

China’s E-commerce Logistics Index reached 114.2 points in August, up 0.1 points from July, according to data from the China Federation of Logistics and Purchasing. Zhou Maohua, macro researcher at Everbright Bank, said the results show the domestic e-commerce logistics industry's prosperity and market demand had improved. China Logistics Information Center analyst Wu Jiang noted the summer Olympics had driven demand for sports consumption, with cycling and fitness equipment selling well. E-commerce logistic firms had seen costs decrease in August due to falling oil prices and the use of new energy distribution vehicles, Wu said.

Leading state-backed securities firms Guotai Junan Securities and Haitong Securities plan to merge in the largest merger in China’s capital-market history, China Fund News reported, citing company announcements. The merger will see total and net assets attributable to the parent company reach CNY1.68 trillion and CNY330 billion, based on 2023 data. Stocks of the two companies were suspended from trading on Friday but will resume within 25 trading days, the newspaper said.