MNI China Daily Summary: Monday, May 11

     REALITY CHECK: China's consumer price inflation rate is likely to slow

further in April as supply constraints on some foodstuffs eased and demand for

transportation and services remained depressed, despite a gradual reopening of

the economy, industry insiders told MNI.

     DATA: China's M2 money supply soared 11.1% y/y in April, the fastest pace

in more than three years, up from 10.1% gain in March and beat forecast 10.3%,

according to data released today by the People's Bank of China (PBOC). New loans

totalled CNY1.7 trillion, less than CNY2.85 trillion in March and higher than

forecast CNY1.3 trillion. Aggregate financing to the economy moderated to

CNY3.09 trillion from March's CNY5.16 trillion, higher than CNY2.9 trillion

projected by analysts.

     LIQUIDITY: The PBOC skipped open market operations for the ninth day,

leaving liquidity unchanged, according to Wind Information. 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 1.2719% from Friday's close of 1.2167%, Wind

Information showed. The overnight repo average rose to 0.8586% from the previous

0.8246%.

     YUAN: The currency weakened to 7.0873 against the dollar from 7.0792 on

Friday. PBOC set the dollar-yuan central parity rate lower at 7.0769 on Monday,

down from the 7.0788 set on Friday.

     BONDS: The yield on 10-year China Government Bond was last at 2.6400%, up

from the close of 2.6150% on Friday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index edged down 0.02% to 2,894.80. Hang

Seng Index rallied 1.53% to 24,602.06.

     FROM THE PRESS: The PBOC should use market measures to guide bank deposit

rates lower, as policy interest rates alone won't effective reduce banks'

liability costs, the PBOC newspaper Financial News reported citing Xie Yunliang,

the chief macroeconomy analyst with Minsheng Securities. Banks have voluntarily

lowered the deposit rates under the pressure from diminishing returns on loans,

suggesting the gap is being closed between deposit and money market rates, the

newspaper cited the central bank's quarterly monetary policy report.

     More than 100,000 foreign-owned companies are trying to sell products

intended for exports to domestic consumers, the Shanghai Securities News

reported citing data from the Ministry of Commerce. The number of newly

registered companies at 1688.com, the largest B2B platform for domestic sales,

grew by 230% m/m in March, the newspaper said citing Wang Hai, the general

manager of the platform. Most companies face a number of challenges, including a

shortage of e-commerce talent, a large number of domestic manufacturers and

fierce price competition in the Chinese market, the report said. 

     A north-eastern Chinese city Shulan raised the highest epidemic response on

Sunday after a woman working in a laundromat spread the virus to 11 others, the

Global Times reported. The woman had no recent travel or exposure history to the

epidemic centre of Wuhan city and the cause remains unknown, raising speculation

that the Covid-19 virus has found a new way spreading, the newspaper 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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