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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI China Daily Summary: Monday, August 07
EXCLUSIVE: China’s steel prices are likely to rise moderately in the third quarter as policymakers cap production at 2022 levels and local demand improves thanks to moves to boost construction and real estate, local analysts told MNI.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY3 billion via 7-day reverse repos on Monday with the rate unchanged at 1.90%. The operation has led to a net drain of CNY28 billion after offsetting the maturity of CNY31 billion reverse repo today, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.7130% from 1.6402%, Wind Information showed. The overnight repo average increased to 1.5194% from 1.1458%.
YUAN: The currency weakened to 7.1920 against the dollar from previous close of 7.1678. The PBOC set the dollar-yuan central parity rate lower at 7.1380, compared with 7.1418 set on Friday. The fixing was estimated at 7.1678 by BBG survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.6875%, down from 2.6880% at previous close, according to Wind Information.
STOCKS: The Shanghai Composite Index edged down 0.59% to 3,268.83, while the CSI300 fell 0.76% to 3,990.15. The Hang Seng Index was down 0.01% to 19,537.92.
FROM THE PRESS: The Yicai Chief Economist Index increased to 50.46 in July, up from 50.21 in June and 50.27 in May, according to Yicai. Economists said the government should introduce fiscal, taxation and finance policies to boost the private sector and build a fair market environment. Changjiang Securities Chief Economist Wu Ge said authorities should ensure the 5% growth target can be reached by implementing real-estate support. Historically, China addressed disinflation pressure through implementing major structural reforms, which the country may also need this time, he said. Another economist noted authorities should expand China’s social security system to allow for an increase in consumption over the longer term.
Reducing stamp duty can not only activate the stock market by increasing investment income, but can also boost the return of listed firms and improve the valuation of high-quality companies, said the Beijing Business Today in a commentary. Stamp duty accounts for two-thirds of transactions costs, or 0.05% of the trade amount, while brokerage commissions and exchange fees are generally 0.025% in total. Meanwhile, if authorities exempt investors from taxation on loss-making transactions, this will help restore investor confidence at a time when retail investors’ performance is generally poor.
A moderate recovery in pork prices is expected in the second half of the year, according to the Securities Daily Network. Financial traders have seen major pig futures contracts increase steadily for three months due to weather conditions, farmers' holding off sales and secondary fattening. In the medium term, China will see a moderate rise in prices as holidays, such as mid-autumn festival, national day and colder weather boost demand. Recent extreme weather has disrupted pork supply in the country, which has increased the price in recent weeks, according to one industry analyst.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.