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Free AccessMNI China Daily Summary: Monday, May 20
EXCLUSIVE: Chances China's Loan Prime Rate could see a cut in the near term have lowered thanks to the central bank’s recently announced property market stimulus and its additional focus on the sector. The Loan Prime Rate, based on the People’s Bank of China (PBOC)’s medium-term lending facility (MLF) rate and quotes submitted by 20 banks, remained at 3.45% for the one-year and 3.95% for the over five-year maturity on Monday. The decision was largely anticipated.
POLICY: Beijing welcomes global automotive firms to integrate with the domestic economy and supply chain, with China one of the most open vehicle markets in the world, Huo Fupeng, a deputy director at the National Development and Reform Commission (NDRC) told state news outlet Xinhua on Monday.
LIQUIDITY: The PBOC conducted CNY2 billion via 7-day reverse repo on Monday, with the rates unchanged at 1.80%. The operation has led to a net drain of CNY2 billion after offsetting the CNY4 billion maturity today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.8085% from 1.8078%, Wind Information showed. The overnight repo average increased to 1.7234% from 1.7106%.
YUAN: The currency weakened to 7.2320 against the dollar from 7.2242 on Friday. The PBOC set the dollar-yuan central parity rate lower at 7.1042 on Monday, compared with 7.1045 set on Friday. The fixing was estimated at 7.2158 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bond was last at 2.3025%, down from the previous close of 2.3077%, according to chinamoney.com.cn.
STOCKS: The Shanghai Composite Index rose 0.54% to 3,171.15 while the CSI300 index gained 0.35% to 3,690.96. The Hang Seng Index edged up 0.42% to 19,636.22.
FROM THE PRESS: Chinese provinces have issued over CNY100 million of consumer coupons to boost tourism in recent weeks, alongside a series of discounts offered by scenic spots, restaurants and hotels, Caixin reported citing the Ministry of Culture and Tourism. The per capita expenditure during the May Day holiday earlier this month represented only three-quarters of the pre-pandemic level, even though the number of trips and total consumption increased by 28.2% and 13.5% over the same period before the Covid-19 pandemic, Caixin added.
Authorities should reform China’s central-to-local fiscal transfer payment system to account for the country’s floating population of 400 million workers to ensure large cities have the funds to provide basic public services such as education, according to Zhang Licheng, a researcher at the Chinese Academy of Fiscal Sciences, speaking at a recent fiscal forum. Xu Hangmin, secretary-general of the Guangdong Finance Society, said local areas currently receive funds in proportion to their fiscal gap, making the system into a reverse incentive that needs correction. The government should strengthen fund monitoring and compliance to avoid unreasonable fiscal gaps, Xu added.
China should address excessive value added in the financial sector to reduce financing costs for the real economy, said Li Yang, chairman of the National Finance and Development Laboratory. The manufacturing sector suffers from low profits, making it unreasonable for the financial industry to still make high amounts of money, Li added. Authorities need to reform finance to support SMEs and poverty alleviation, with a focus on medical and elderly care, Li continued. (Source: Yicai)
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.