MNI China Daily Summary: Monday, June 29

     TOP NEWS: China will impose visa restrictions on some U.S. officials who

"behaved badly" on Hong Kong issues in response to visa restrictions imposed by

the U.S. on related Chinese officials, Zhao Lijian, spokesman of the Ministry of

Foreign Affairs said at a briefing on Monday. The U.S. attempt to obstruct

China's national security law in Hong Kong through sanctions won't succeed, Zhao

said.

     POLICY: Profits made by China's state-owned and -controlled companies

surged in May from April to near the same level as a year ago as major

indicators significantly improve, the Ministry of Finance said in a statement on

its website today. China's SOEs last month collectively made 251.1% of the

profits seen in April, or 94.5% of the level a year ago, according to the

ministry's statement. 

     POLICY: The People's Bank of China (PBOC) conducted the sixth central bank

bill swap (CBS) today to support the issuance of perpetual bonds by commercial

banks. The CNY5 billion CBS is open to primary dealers at a fixed rate of 0.1%

and due on Sept. 29, 2020, the PBOC said. The CBS scheme allows dealers to swap

the perpetual bonds they hold for central bank bills, boosting demand for

perpetual bonds.

     LIQUIDITY: The PBOC skipped open market operations, resulting in a net

drain of CNY40 billion given the same amount of maturing reverse repos,

according to Wind Information. Fiscal spending is increasing near the month end,

and liquidity in the banking system is reasonable and ample, the PBOC said on

its website.

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

institutions (DR007) increased to 2.1840% from Sunday's close of 2.0700%, Wind

Information showed. The overnight repo average fell to 1.0107% from the previous

1.0500%.

     YUAN: The currency weakened to 7.0788 against the dollar from 7.0744 on

Sunday. The PBOC set the dollar-yuan central parity rate at 7.0808 compared with

the last setting of 7.0555, the biggest daily rise since June 12.

     BONDS: The yield on 10-year China Government Bond was last at 2.8525%, up

from the close of 2.8400% on Sunday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index edged down 0.61% to 2,961.52. Hang

Seng Index lost 1.01% to 24,301.28.

     FROM THE PRESS: The PBOC's monetary policy Q2 meeting suggests a marginal

tightening, according to a commentary in the 21st Century Business Herald

published on Sunday. Compared with its Q1 monetary policy report, the PBOC has

put forward a new requirement that monetary policy should take into account

"sustainable development". This could mean the period of the loosest monetary

policy has passed, the newspaper said. The PBOC also removed "controlling

inflation" from its target as the CPI fell. Although this will leave room for

some monetary easing, the easing won't be greater than in the first half, the

commentary said.

     China must increase support to small and private companies and

labour-intensive firms, and help key large-scale foreign trade enterprises with

their difficulties as a way of stabilising the jobs market, Premier Li Keqiang

said on Sunday, according to a statement on the State Council website. China

should also accelerate the export tax rebate process, and make greater efforts

to stabilize the supply and industrial chains, the statement read.

     China's new plans to develop high-quality investment banks won't impact

existing industry, the Economic Information Daily reported citing spokesman for

the China Securities Regulatory Commission (CSRC). The regulator responded to

rumours that the CSRC plans to grant investment banking licenses to commercial

lenders in a pilot scheme which could involve at least two of the country's

largest banks. 

--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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