MNI China Daily Summary: Monday, September 6

EXCLUSIVE: Help will likely be at hand for China Evergrande Group as it moves to untangle a complex debt load of yuan and dollar bonds and commercial paper that has drawn the concern of the People's Bank of China as a company "too big to fail", policy advisors and market analysts told MNI. Evergrande is the second-largest property developer by sales in China and the most indebted. Any repayment problems could raise risks of contagion in the financial sector, with the PBOC and other regulators, including local hot property markets such as Guangzhou, likely to step in if so.

POLICY: China must stick to market economy reforms and its policy to support private companies will not change, said Vice Premier Liu He at the China International Digital Economy Expo on Monday, according to Xinhua News Agency.

POLICY: China will facilitate panda bond sales in China by foreign institutions and formulate rules on trading on the domestic markets, said Fang Xinghai, vice chairman of China Securities Regulatory Commission at a form on Saturday.

POLICY: China will facilitate foreign financial institutions entering its domestic market by optimizing the requirement for banks and insurers, ease crossborder transactions between parent companies and subsidiaries, and improve governance on how foreign capital operates in the domestic financing market, the PBOC Deputy Governor Chen Yulu said at a forum on Saturday.

LIQUIDITY: The PBOC injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.2%. The operation resulted in a net drain of CNY40 billion given the maturity of CNY50 billion reverse repos, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 2.1385% from 2.0478% on Friday, Wind Information showed. The overnight repo average increased to 2.1140% from the previous 1.9321%.

YUAN: The currency strengthened to 6.4538 against the dollar from 6.4565 on Friday. The PBOC set the dollar-yuan central parity rate slightly lower at 6.4529, compared with the 6.4577 set on Friday.

BONDS: The yield on 10-year China Government Bond was last at 2.8325%, up from 2.8300% on Friday, according to Wind Information.

STOCKS: The Shanghai Composite Index rallied 1.12% to 3,621.86 while the CSI300 index gained 1.87% to 4,933.73. Hang Seng Index increased 1.01% to 26,163.63.

FROM THE PRESS: The PBOC is likely to increase liquidity by cutting the reserve requirement ratios or even interest rates this year when the market needs it, the China Securities Journal reported citing Zeng Gang, deputy director of the National Institution for Finance & Development. The probability of RRR cuts is higher, as it will improve liquidity more directly and drive banks to increase capital investment and lower credit costs, the newspaper cited Zeng as saying. The PBOC will provide medium and long-term, low-cost funds for specific entities and areas such as technology innovation, SMEs, rural revitalization and carbon emission through monetary tools such as special-purpose re-lending and rediscounting, Zeng was cited as saying.

China may introduce bulk marine shipping futures sooner than expected, as the country seeks to accelerate opening more futures products to foreign traders, and cater to the growing hedging needs amid increasing shipping prices, the 21st Century Business Herald reported after a State Council circular that called for more futures trading through the Free Trade Zones. More FTZs may learn from the Shanghai FTZ in creating an international commodity futures market denominated and settled in yuan, so to increase the pricing power of iron ore, soybeans, and PTA globally, the newspaper cited an industry insider. By opening up to overseas traders, the speculation in the domestic market could be eased, the newspaper said.