MNI China Daily Summary: Monday, September 9

     POLICY: China's central bank further cut the amount of reserves lenders

must set aside on Friday, unlocking CNY900 billion in long-term liquidity as the

world's second-largest economy seeks to encourage lending and reignite growth.

The People's Bank of China will implement a 0.5 percentage point

across-the-board cut in banks' reserve requirement ratios on Sept. 16, it said

on its website. In line with its focus on helping small businesses, city

commercial banks will receive another 1 pp cut, carried out in two

0.5-percentage point instalments on Oct. 15 and Nov. 15, the central bank said.

     LIQUIDITY: The PBOC injected CNY120 billion via 7-day reverse repos, with

no reverse repos maturing today,  according to Wind Information. There was also

CNY176.5 billion MLF maturing today, according to the central bank.

     RATES: The seven-day weighted average interbank repo rate for depository

institutions (DR007) fell to 2.6538% from Friday's close of 2.6631%, Wind

Information showed. The overnight repo average increased to 2.6035% from

Friday's 2.5926%. 

     YUAN: The yuan weakened to 7.1286 against the dollar from Friday's close of

7.1243. The PBOC set the dollar-yuan central parity rate lower at 7.0851,

compared with 7.0855 on Friday.

     BONDS: The yield on 10-year China Government Bonds was last at 3.0225%, up

from the close of 3.0075% on Friday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index increased 0.84% to 3,024.74. Hong

Kong's Hang Seng Index edged down 0.04% to 26,681.40. 

     FROM THE PRESS: There would be no disorderly depreciation of the yuan as

many factors support the currency at present, according to a front page

commentary in the China Securities Journal on Monday. With the dollar at a high

point in its cycle, the yuan isn't expected to depreciate and the impact of

exchange rate on capital flows and asset prices is controllable.

     A total of CNY3.98 trillion in local government debt was issued in China

this year through Sept 8, with CNY2.90 trillion in new government bonds, to help

stabilize investment, the Securities Daily reported citing data from the

Ministry of Finance. 

     China's local governments have taken strong measures to stabilize the pork

market, including the prevention and control of African swine fever, and pork

production and distribution are recovering, the People's Daily reported. The

pork market is stable, and meat supply can be guaranteed, the paper said.

--MNI Beijing Bureau; tel: +86 (10) 8532-5998; email: flora.guo@marketnews.com

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

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