MNI China Daily Summary: Monday, July 6

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations

for the sixth day, draining CNY180 billion given the same amount of reverse

repos matured, according to Wind Information. The total liquidity in the banking

system is at a relatively high level, enough to offset the impact of matured

repos and financial institutions' payment of statutory deposit reserves, the

PBOC said on its website.

     RATES: The seven-day weighted average interbank repo rate for depository

institutions (DR007) fell to 1.7354% from Friday's close of 1.8259%, Wind

Information showed. The overnight repo average decreased to 1.3505% from the

previous 1.3596%.

     YUAN: The currency strengthened to 7.0319 against the dollar from 7.0680 on

Friday, hitting a near three-month high as foreign capital flows into China

following the rally of A shares. The PBOC set the dollar-yuan central parity

rate higher at 7.0663, compared with the 7.0638 set on Friday.

     BONDS: The yield on 10-year China Government Bond was last at 2.9975%, up

from the close of 2.8975% on Friday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index rallied 5.71% to 3,332.88, the largest

daily gain in five years, fueled by speculation of a stronger-than-forecast

Chinese recovery. Hang Seng Index gained 3.81% to 26,339.16.

     FROM THE PRESS: China's GDP growth may reach 2.7% in Q2 led by rebounds in

industrial and construction industries, the Securities Daily reported citing

Zhang Yu, chief analyst at Huachuang Securities. The accelerated exports of

anti-epidemic materials may push the trade surplus to more than CNY1 trillion in

Q2 and be a strong GDP driver, the daily said.

     China's local governments have issued total CNY2.23 trillion new special

bonds in the first half of 2020, a rise of 28% y/y, with 80% of the funds

invested in infrastructure, the Securities Daily reported. The funds were

largely used to support the construction of industrial parks, develop the

medical and health care system, build transportation facilities and renovate old

communities, the newspaper said. China plans to issue CNY3.75 trillion of the

bonds this year.

     Some Chinese cities where housing and land prices have risen too fast in

the past months may tighten housing regulations in H2, the Securities Times said

in a commentary. The real estate market has returned to the pre-epidemic level,

and some hotspots have begun to see heated home sales and high premium rates for

land transactions, both of which may signal speculation, the newspaper said.

Last week, Hangzhou city implemented a five-year sales restriction on any

housing purchased by high-level talents, while Dongguan strengthened the

management of housing pre-sales, the newspaper said.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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