MNI China Daily Summary: Monday, January 22

PBOC: China's Loan Prime Rate remained unchanged according to a People's Bank of China (PBOC) statement, in line with market expectation following the PBOC's decision to keep a key policy rate steady on Jan 15.

LIQUIDITY: The PBOC conducted CNY122 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The reverse repo operation has led to a net injection of CNY33 billion reverse repos after offsetting CNY89 billion maturity today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8800% from 1.8707%, Wind Information showed. The overnight repo average increased to 1.7628% from 1.7265%.

YUAN: The currency weakened to 7.1968 against the dollar from previous close of 7.1938. The PBOC set the dollar-yuan central parity rate lower at 7.1105, compared with 7.1167 set on Friday. The fixing was estimated at 7.1873 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.4930%, down from 2.5050% at the previous close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 2.68% to 2,756.34, while the CSI300 decreased 1.56% to 3,218.90. The Hang Seng Index fell 2.27% to 14,961.18.

FROM THE PRESS: The People’s Bank of China has added China CITIC Bank and Bank of Jiangsu to its Loan Prime Rate (LPR) quotation list, taking the total number of banks to 20, according to a notice on the central bank's website. Additionally, authorities will adjust the LPR release time from 9:30am to 9:15am on the 20th of each month to strengthen expectation management and promote better connection between the release time and financial market’s operating time. Yicai noted this adjustment marks the second time the PBOC has adjusted the LPR quotation list since the 2019 reforms. (Source: Yicai)

China’s infrastructure investment will underpin stable economic activity this year and grow by 8% y/y, according to Luo Zhiheng, chief economist of Guangdong Securities. Wang Qing, chief macro analyst at Oriental Jinchen, said authorities focus on constructing affordable housing, public infrastructure and the transformation of urban villages – the so called “three projects” – will alleviate falling real-estate investment and inject new growth into infrastructure. Sun Jingyuan, a leader at China Bond Ratings, expects the "three major projects" to drive between CNY900 billion to CNY1.3 trillion of investment every year on average. (Source: Yicai)

Chinese firms should make use of the China-EU train route to mitigate Red Sea supply-chain disruptions, while U.S. bound shipments can use the west American route, according to Liu Shuohu, vice president of logistics at DHgate Group. Economists interviewed by Yicai said the Red Sea crisis could disrupt all aspects of international logistics and supply chain if it continues. Yicai estimates shipments to the EU via the Cape of Good Hope instead of the Suez Canal adds at least 10 days to voyages. (Source: Yicai)