MNI China Daily Summary: Monday, July 31

DATA: China's Purchasing Managers' Index contracted for the fourth straight month, registering 49.3 in July, rebounding slightly from 49 in June though still below the breakeven 50 mark, data from the National Bureau of Statistics showed. Non-manufacturing PMI registered 51.5, a further fall from last month's 53.2.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY31 billion via 7-day reverse repos with the rate unchanged at 1.90%. The operation has led to a net injection of CNY17 billion after offsetting the maturity of CNY14 billion reverse repo today, according to Wind Information. The operation aims to keep month-end liquidity stable, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.9819% from 1.8152% on Friday, Wind Information showed. The overnight repo average increased to 1.8798% from the previous 1.4552%.

YUAN: The currency strengthened to 7.1465 against the dollar from 7.1645 on Friday. The PBOC set the dollar-yuan central parity rate lower at 7.1305, compared with 7.1338 set on Friday. The fixing was estimated at 7.1532 by BBG survey today.

BONDS: The yield on 10-year China Government Bond was last at 2.7075%, up from Friday's close of 2.7000%, according to Wind Information.

STOCKS: The Shanghai Composite Index rose 0.46% to 3,291.04, while the CSI300 index gained 0.55% to 4,014.63. The Hang Seng Index increased 0.82% to 20,078.94.

FROM THE PRESS: Policymakers will accelerate the use of investment funds to increase the country’s physical workload to deal with insufficient domestic demand, hidden risks and a complex external environment, according to the National Development and Reform Commission. At a recent NDRC meeting, leaders said policy support in future will focus on expanding consumption and investment and reactivating private investment while utilising the guiding role of government investment. China will promote self-reliance in high-level science and technology and promote traditional industry upgrading. (Source: 21st Century)

Authorities should focus on strengthening investment by developing capital market, following the Politburo meeting’s latest call to “activate the capital market and boost investor confidence”, said China Securities Journal in a front-page commentary. The A-share market still faces insufficient medium- and long-term funds, while the asset pricing and management capabilities of professional institutions needs improvement. Authorities should continue to relax the proportion and scope of various medium- and long-term funds entering the market and increase the weight of A-shares included in international indexes to attract overseas funds. (Source: China Securities Journal)

First-tier cities will release detailed measures soon to prop up the property market in response to top policymakers’ call to adjust housing policies. Tier-one cities including Beijing, Shenzhen and Guangzhou said during the weekend they will support home purchases to meet essential dwelling demand and needs for better housing. Analysts expect tier-one cities may adopt “one district one policy” rules to relax local housing markets gradually as the principle of “housing is for living, not for speculation” remains. (Source: Yicai)