MNI China Daily Summary: Thursday, August 31

DATA: China's Purchasing Managers' Index contracted for the fifth straight month, registering 49.7 in August, rebounding slightly from 49.3 in July though still below the breakeven 50 mark, data from the National Bureau of Statistics showed. Non-manufacturing PMI registered 51, falling from last month's 51.5.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY209 billion via 7-day reverse repos, with the rates unchanged at 1.80%. The operation has led to a net injection of CNY148 billion after offsetting the maturity of CNY61 billion reverse repo today, according to Wind Information. The operation aims to keep banking system liquidity stable at the end of the month, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 2.2481% from 2.2540%, Wind Information showed. The overnight repo average fell to 1.8864% from the previous 1.9008%.

YUAN: The currency strengthened to 7.2904 against the dollar from 7.2925 on Wednesday. The PBOC set the dollar-yuan central parity rate lower at 7.1811, compared with 7.1816 set on Wednesday. The fixing was estimated at 7.2776 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.6300%, down from Wednesday's close of 2.6400%, according to Wind Information.

STOCKS: The Shanghai Composite Index closed down 0.55% at 3,119.88, while the CSI300 index decreased 0.61% to 3,765.27. The Hang Seng Index edged down 0.55% to 18,382.06.

FROM THE PRESS: Authorities will guide banking and insurance institutions to enrich financial products further and invest more financial resources into private companies in advanced manufacturing, technological innovation, and environmental protection, said Zhou Liang, deputy head at the National Financial Regulatory Administration in a conference on Wednesday to promote the development of private enterprises. The China Securities Regulatory Commission will make full use of various tools such as equity, bonds, funds, futures and REITs to develop the private economy and support qualified private enterprises to list overseas, said CSRC Vice Chairman Wang Jianjun. (Source: Yicai)

China will continue to prevent and defuse local government debt risks in H2 which remains a priority, according to the Ministry of Finance. In a recent report on fiscal policy implementation, the ministry said authorities will focus on supervising local governments to resolve hidden debt issues and roll out measures to support reduction in interest burdens. Officials noted in H1 debt management was strengthened with local governments accessing debt legally, while back-door hidden debt was blocked. (Source: 21st Century Business Herald)

Guangzhou and Shenzhen on Wednesday become the first two tier-one cities in China to announce easing of mortgage rules to revive the ailing property sector. Guangzhou will allow home buyers to enjoy preferential loans for first-home purchases, with a 30% downpayment ratio and 4.2% interest rate, regardless of their previous mortgage record. The policy effects will be noted gradually over Q4 and more cities including Dongguan and Foshan in Guangdong province will likely follow, said Li Yujia, chief research fellow at Guangdong Urban & Rural Planning and Design Institute. (Source: 21st Century Business Herald)