MNI China Daily Summary: Monday, March 18

     DATA: China collected total CNY232.6 billion personal income taxes in

January and February, down 18.1% y/y, according to data released by the Ministry

of Finance on Monday. The stamp duty revenue was CNY46.4 billion, a decrease of

24.5% y/y. Among them, stamp duty on securities transaction dropped by 41.1% to

CNY19.7 billion.

     DATA: Chinese banks net sold foreign exchange on behalf of their clients

last month, indicating a reversal to outflow. Banks sold CNY102.3 billion worth

FX, reversing a net purchase of CNY103.1 billion FX in January. A greater net

selling number corresponds to a larger FX outflow. The yuan strengthened 0.28%

against the U.S. dollar last month following January's 2.33% gain. 

     LIQUIDITY: The PBOC injected CNY60 billion through open market operations.

With no reverse repos maturing, the net injection was the full CNY60 billion,

according to Wind Information. Today's reverse repo is to offset the peak of tax

season, the PBOC said. There is also a CNY327 billion one-year Medium-term

Lending Facility maturing today, Wind Information said.

     RATE: The 7-day weighted average interbank repo rate for depository

institutions (DR007) increased to 2.8000% from the close of 2.7638% on Friday,

Wind data showed. The overnight repo average rose to 2.7500% from 2.6567% on

Friday.

     Yuan: The yuan depreciated to 6.7123 against the U.S. dollar from the close

of 6.7117 on Friday. The PBOC set the dollar-yuan central parity rate at 6.7088

today, compared with 6.7167 set last Friday.

     STOCKS: The benchmark Shanghai Composite Index rose 2.47% to 3,096.42,

benefiting from the strong rally of consumer stocks, especially liquor, medicine

and beer shares, Wind Information said. Hong Kong's Hang Seng Index increased

1.37% to 29,409.01, the highest in nine months.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.165%, down 0.5 bps from the close of Friday, according to Wind.

     FROM THE PRESS: The Ministry of Commerce will strive to promote the

high-quality development of foreign trade, further develop diversified market,

promote the transformation of processing trade, upgrading the level of the

industrial chain, actively expand imports, optimize the import structure, and

promote the development of border trade, the Economic Information Daily reported

citing Ren Hongbin, assistant to the Minister of Commerce.

     A further opening up of the financial sector to foreign investors is under

way, including banking, insurance and the bond market, with further expansion to

be tried in key areas such as the Guangdong-Hong Kong-Macao Greater Bay Area,

the Economic Information Daily said in a front-page op-ed today. It is worth

noting that capital inflows accelerated recently, so it is also important to

prevent the risk of cross-border capital flows while promoting the opening, the

paper warned.

     Listed companies' earnings could increase 3%-9% this year due to the

government's CNY2 trillion of tax and fee cuts, said China International Capital

Corp. Upstream and manufacturing industries such as coal, auto, real estate and

medicine will benefit the most from the cuts, CICC said. Food and beverage,

health care, home appliances, retail, catering and tourism will also benefit

from improved corporate profits and increased disposable income, CICC 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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