MNI China Daily Summary: Monday, March 3
POLICY: China's Caixin manufacturing PMI came in at 50.8 in February, up from January's 50.1, staying in the expansionary zone above the 50 mark for the fifth straight month and hitting a three-month high, the financial publisher said.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY97 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY195.5 billion after offsetting the maturity of CNY292.5 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.8599% from 2.1262%, Wind Information showed. The overnight repo average decreased to 1.7877% from 1.8552%.
YUAN: The currency weakened to 7.2931 against the dollar from 7.2838 on Friday. The PBOC set the dollar-yuan central parity rate higher at 7.1745, compared with 7.1738 set on Friday. The fixing was estimated at 7.2859 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.7125%, down from the previous close of 1.7375%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index fell 0.12% to 3,316.93 while the CSI300 index decreased 0.04% to 3,888.47. The Hang Seng Index edged up 0.28% to 23,006.27.
FROM THE PRESS: China issued CNY596 billion of new local government special bonds during the first two months of the year, up from CNY403 billion over the same period last year, reported Securities Daily. In total, local bond issuance reached CNY1.8 trillion, versus CNY944 billion in 2024 and CNY1.2 trillion in 2023, the news outlet said. Refinancing bonds to replace existing debt hit CNY954 billion, accounting for about 51.2% of total local bond issuance. Wen Bin, chief economist at China Minsheng Bank, said CNY1.5 trillion of local bonds were expected in March, up CNY 900 billion compared to the same period last year.
Authorities will promote consumption and developing AI, and other emerging sectors during the upcoming “Two Sessions” this week, China Fund News reported, citing analysts' expectations. In addition to the trade-in program for consumer goods, more medium- and long-term measures to boost spending are also expected, such as offering maternity allowance and supportive measures for pension and social security, said Zhu Guoqing, deputy general manager at Pengyang Fund.
The People’s Bank of China will guide banks to support private and small business through increased lending using structural monetary policy tools, and further facilitate diversified financing channels via stocks, bonds and loans, according to a meeting held by the PBOC and four other departments. Officials need to improve the credit enhancement system for private and small firms, accelerate the issuance of regulations on supply chain finance, and strengthen bond market product innovation, the meeting said. (Source: PBOC website)