MNI China Daily Summary: Monday, May 28

     DATA: Profits made by China's industrial companies in April surged by 21.9%

y/y to CNY576.03 billion, according to a monthly study published Sunday by the

National Bureau of Statistics (NBS). That compared with 3.1% y/y growth in the

month of March. Total profits in the first four months rose 15.0% y/y to CNY2.13

trillion, faster than 11.6% y/y registered in Q1. Companies included in the NBS

study had over CNY20 million in annual revenue from their main business

activities.

     DATA: A weekly currency index of China's yuan dropped for the first time

since April 4, on a trade-weighted basis against the currencies of its major

trading partners, according to data released by the People's Bank of China. The

CFETS Weekly RMB Index, which measures the yuan relative to a basket of 24

currencies, fell by 0.26% on May 25 from the previous week to 97.63. As of last

Friday, the RMB gauge has recorded a 2.93% gain year-to-date, up from 94.85 on

Dec 29, according to MNI's calculations.

     NEWS: The PBOC injected CNY20 billion and CNY10 billion in 7-day and 28-day

reverse repos on Monday, according to a statement on its website. The central

bank left the rate on 7-day RR unchanged at 2.55% while raising the 28-day RR by

5 basis points to 2.85%, according to the statement. A total of CNY370 billion

in reverse repos will mature this week. CFETS-ICAP's money-market sentiment

index closed at 42 on Friday, up from 36 on Thursday. 

     MONEY MARKET RATES: The 7-day repo average decreased to 2.7658% from

2.8305% Friday, after the PBOC net injected CNY30 billion via OMO. The overnight

repo average increased to 2.5213% from Friday's 2.5045%.

     YUAN: The yuan fell to 6.3915 against the U.S. dollar from Friday's closing

of 6.3891. Earlier today, the PBOC set the parity weaker for the third trading

day at 6.3962, down from Friday's 6.3867.

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

3.6200%, up from the previous close of 3.6100%, according to Wind Information.

     STOCKS: Shares declined in Shanghai as energy producers fell, with China

Oilfield Services down by close to 5%. The benchmark Shanghai Composite Index

closed 0.20% lower at 3,135.08. Hong Kong's Hang Seng Index gained 0.74% to

30,815.62.

     FROM THE PRESS: The yuan is resilient against the dollar's rebound, China

Securities Journal reported. The yuan won't depreciate as much as currencies of

other emerging economies have done recently given China's stable growth, over

USD3 trillion forex reserves, and the central bank's stabilizing tools such as

the counter-cyclical adjustment factor, said the newspaper. A stable and healthy

growth and prudent monetary policy fundamentally support the yuan's steady

upward move, the newspaper said. The yuan is appreciating against a basket of

currencies, according to official data, which will attract foreign capital and

support the yuan, it said.

     Financial regulators led by the PBOC are speeding up the re-classification

and collection of statistics on wealth management products (WMPs), Securities

Daily reported, citing a PBOC official. Authorities want to better assess the

state of cross-market financial products, the daily cited the PBOC official as

saying. WMPs by security companies, funds managers, insurance companies and

private equities are expected to be classified as newly-defined WMPs, the daily

said. Regulators will soon begin assessing financial holding companies, the

daily said citing the PBOC official. 

***COMMENT: China's new rules on WMPs will take effect by the end of 2020.

Companies affected are under pressure to adjust businesses.

     China needs to maintain strict policies on the property market to contain

bubbles and discourage speculation, the People's Daily said in a commentary. A

frenzy in the property market in some northeastern cities isn't normal and shows

that speculations may still be rampant if regulations are loosened, the daily

said. Local government officials need to be told not to rely heavily on property

development for growth, the newspaper said.

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

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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