MNI China Daily Summary: Monday, June 20

POLICY: China’s reference lending rate remained unchanged, according to a statement on the People's Bank of China (PBOC) website, which was in line with market expectations after the central bank maintained a key policy rate last week. The Loan Prime Rate, based on the rate of PBOC’s Medium-term Lending Facility and quotes submitted by 18 banks, remains at 3.70% for the one-year maturity and 4.45% for five years. The PBOC left the rate on its 1-year MLF unchanged at 2.85% on June 15 when it rolled over the CNY200 billion maturing under the facility.

LIQUIDITY: The PBOC injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.1%. This keeps the liquidity unchanged after offsetting the maturity of CNY10 billion repos today, 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) increased to 1.7042% from 1.6584% on Friday, Wind Information showed. The overnight repo average rose to 1.4203% from the previous 1.4155%.

YUAN: The currency strengthened to 6.6860 against the dollar from 6.7010 on Friday. The PBOC set the dollar-yuan central parity rate higher at 6.7120, compared with 6.6923 set on Friday.

BONDS: The yield on 10-year China Government Bond was last at 2.8275%, up from the previous close of 2.8150%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.04% to 3,315.43 while the CSI300 index gained 0.50% to 4,330.43. Hang Seng Index rose 0.42% to 21,163.91.

FROM THE PRESS: The Chinese economy is expected to grow by around 3% in Q2, and it should strive to achieve the annual target of growing 5.5%, The Paper reported citing Yao Jingyuan, former chief economist and spokesperson of the National Bureau of Statistics. It is not a question of what policy is still lacking, but a matter of implementing the 33 pro-growth measures released by the State Council earlier, the newspaper said citing Yao. Local governments can further reduce the down payment ratio and lower the mortgage rate to boost housing demand, and it is also necessary to offer more support to private and small business to promote employment, Yao was cited as saying.

China’s retail sales are expected to improve in June and turn positive later amid stimulus including the issuance of consumer coupons and “red envelopes” in the form of e-CNY, the Securities Daily reported. Xiamen city will issue over CNY20 million in digital red envelopes and CNY40 million worth of e-CNY coupons this week, while Wenzhou city is about to issue CNY30 million of e-CNY red envelopes, the newspaper said. Retail sales still fell by 6.7%y/y in May, narrowing from the previous 11.1% decline.

Jiangsu, the neighboring province of Shanghai has largely relaxed the quarantine policy for people leaving Shanghai, Yicai.com reported. Nanjing, Suzhou and other cities in Jiangsu have scrapped the requirement of “seven-day collective quarantine + seven-day home quarantine” for people not coming from medium or high risks areas in Shanghai, and only apply “seven-day health monitoring” which suggests not to go to crowded areas or take public transportation during the period, the newspaper said.