MNI China Daily Summary: Monday, September 18

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY184 billion via seven-day repo and CNY60 billion via 14-day repo on Monday, with the rate unchanged at 1.80% and 1.95%, respectively. The operation has led to a net injection of CNY29 billion after offsetting the maturity of CNY215 billion reverse repos and CNY400 billion MLF today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.9506% from 1.9079%, Wind Information showed. The overnight repo average increased to 1.9184% from 1.7548%.

YUAN: The currency weakened to 7.2920 against the dollar from previous close of 7.2691. The PBOC set the dollar-yuan central parity rate lower at 7.1736, compared with 7.1786 set on Friday.

BONDS: The yield on 10-year China Government Bonds was last at 2.7025%, down from 2.7050% at the previous close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.26% to 3,125.93, while the CSI300 increased 0.51% to 3,727.71. The Hang Seng Index was down 1.39% to 17,930.55.

FROM THE PRESS: The People's Bank of China still has room to cut interest rates and add new structural tools to support the economic recovery following the cut to the reserve requirement ratio last week, said Ming Ming, chief economist at CITIC Securities. While fiscal policy should focus on resolving debt and releasing the vitality of market entities, authorities should consider increasing the size of next year's fiscal deficit, said Ming. After showing early signs of life in August macroeconomic data, the economy is expected to rebound further in Q4 and achieve the 5% growth target for 2023, said Zhang Jun, chief economist at China Galaxy Securities. (Source: Yicai)

China is willing to expand its imports from ASEAN nations to build stronger regional supply chains, Premier Li Qiang noted. Speaking at the 20th China-ASEAN Expo opening ceremony, Li told delegates China also wants to expand cooperation with ASEAN in the fields of culture and tourism, and continuously enhance mutual understanding between people. In future, China will further promote construction projects to enhance integration along ASEAN Belt and Road countries. (Source: Yicai)

The increased inclusion of A-shares in the FTSE Global Index is expected to bring a net inflow of over CNY7.3 billion in passive tracking funds to China's stock market. A total of 623 A-shares were added during the latest quarterly adjustment with the total number of A-shares included in the Index now at 1,903. FTSE Russell will increase the A-share inclusion to 25% in Q1 2024 from the current 12.5%, further boosting foreign investor participation in the A-share market. (Source: Securities Daily)