MNI China Daily Summary: Monday, March 19

     TOP NEWS: The most important task for the People's Bank of China is to

implement prudent monetary policy well, the new head of the central bank told

reporters on the sidelines of the meeting of National People's Congress Monday.

Yi Gang, who was appointed governor of the PBOC earlier, said China also needs

to advance reform and the opening of its financial sector, as well as maintain

financial stability. He said China will take measures to further reform and open

the financial sector, without giving specifics. But he told reporters more

detailed policies and actions will be announced at the coming Boao Forum for

Asia in Hainan Province, expected in early April. The National People's Congress

officially voted Yi in as new central bank head Monday. 

     DATA: Average new home prices growth for 70 cities, excluding subsidised

housing, rose 0.2% month-on-month in February, lower than the 0.3% growth in

January. It grew 5.8% year-over-year in February, 0.4 percentage point higher

than growth in January due to base effects. Price growth continued to cool in

February, which shows the property controls implemented by the Chinese

government are taking effect and curbing price growth.

     DATA: China's currency rebounded last week on a trade-weighted basis

against the currencies of its major trading partners, according to weekly data

released on Monday by the PBOC. The CFETS Weekly RMB Index, which measures the

yuan relative to a basket of 24 currencies, rose 0.18% last week to 96.12. As of

Mar 16, the RMB gauge has recorded a 1.34% gain year-to-date, up from 94.85 on

Dec 29 last year, according to MNI's calculations.

     LIQUIDITY: The PBOC injected CNY30 billion via its 7-day reverse repo and

CNY20 billion via its 14-day reverse repo on Thursday, according to Wind

Information, a Shanghai-based financial data provider. This resulted in

unchanged liquidity conditions, as a total of CNY50 billion in reverse repos

mature today. A total of CNY380 billion in reverse repos will mature this week.

The CFETS-ICAP's money-market sentiment index closed at 36 on Friday, slightly

up from 35 on Thursday.

     MONEY MARKET RATES: Average 7-day repo rates dropped to 2.8061% from the

2.8071 on Friday, after the PBOC's CNY50 billion injection via open-market

operations balanced out with the same amount of reverse repo maturities. The

overnight repo average was down to 2.5415% from Friday's 2.5619%.

     YUAN: The yuan fell against the U.S. dollar despite PBOC set a stronger

daily fixing. The yuan fell 0.02% to 6.3305 against the U.S. unit, compared with

the official closing price of 6.3247 yesterday. The PBOC set the yuan central

parity rate vs the U.S. dollar at 6.3320 on Monday, stronger than last Friday's

6.3340.

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

3.8100%, down from the previous close of 3.8200%, according to Wind Information.

     STOCKS: Shares rose in Shanghai, led by healthcare companies on strong

investor confidence, with Topchoice Medical Investment Co., Inc up by more than

4%. The benchmark Shanghai Composite Index closed 0.29% higher at 3,279.25. Hong

Kong's Hang Seng Index gained 0.19% to 31,562.28.

     FROM THE PRESS: Market participants expect the PBOC to hike its reverse

repo rates after a very likely rate hike by the Federal Reserve on Wednesday,

reported the 21st Century Business Herald, citing analysts and traders. The PBOC

did not increase its Medium-term Lending Facilities rates last Friday, which

could be because it did not want to postpone a rollover in MLF loans to this

week; and it is likely to increase its MLF rates in April, suggested Ming Ming,

the chief fixed income analyst at China CITIC Securities.

     The opening up of China's financial market will play out in the futures

market, reported the China Securities Journal, citing Zhao Guiping, the

President of Guangfa Futures, at a forum last week. The crude oil futures listed

on Shanghai International Energy Exchange, which will begin to trade on March

26, is the first futures open to international financial markets. This will be

an important starting point for foreign investors looking to participate in

China's commodities futures market, Zhao said.

     China will take measures to continue supporting the growth of consumption

in new areas, including environmentally friendly products, digital consumption

and travel consumption, the Economic Information Daily reported. The scale of

consumption will continue to expand, the structure of consumption will continue

to see upgrades, and consumption's contribution to GDP growth will continue to

increase, according to multiple analysts and experts cited by the report.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]