MNI China Daily Summary: Friday, July 22

POLICY: China policymakers will focus on announced stimulus measures for now and remain cautious on any big new plans in a sign the country would miss a full-year growth target of 5.5% and aim for an annual GDP expansion above 4%, policy advisors and market analysts said.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY3 billion via 7-day reverse repos with the rate unchanged at 2.1%. This keeps the liquidity unchanged after offsetting the maturity of CNY3 billion repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.4827% from 1.5236% on Thursday, Wind Information showed. The overnight repo average fell to 1.1877% from the previous 1.2477%.

YUAN: The currency slightly weakened to 6.7657 against the dollar from 6.7634 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 6.7522, compared with 6.7620 set on Thursday.

BONDS: The yield on 10-year China Government Bond was last at 2.7850%, up from Thursday's close of 2.7640%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.06% to 3,269.97 while the CSI300 index edged up 0.05% to 4,238.23. Hang Seng Index gained 0.17% to 20,609.14.

FROM THE PRESS: China should expand government debt financing in the second half of 2022 to fill a funding gap of not less than CNY3 trillion to help boost infrastructure investment and support economic growth, as local governments with falling land sales and tax revenues are finding it hard to meet their spending targets, according to a report by China Finance 40 Forum. Issuing special treasury bonds, fiscal discount bonds and policy financial loans can be considered. Meanwhile, the central bank should cut the policy rate by 25 basis points, and should continue until the economy revives with high vitality for more than two consecutive quarters, as rate cuts will greatly help improve corporate cash flow and increase demand, the report said.

China’s top banking regulator said it will support local governments to ensure the delivery of unfinished property projects, guide banks to actively help resolve funding gaps, and provide credit to qualified developers, the Securities Daily reported citing the China Banking and Insurance Regulatory Commission. The CBIRC will maintain the continuity and stability of real estate financial policies, the newspaper said. MNI notes that a wave of disgruntled homebuyers vowed to stop making mortgage payments on stalled projects has spread across the country starting in July.

Chinese cities may continue to lower mortgage interest rates to lure buyers to shore up the still bleak housing market, including big cities with relatively high rates and smaller cities with poor transaction data, the Securities Daily reported citing Yan Yuejin, director of E-house China Research and Development Institution. The average rates of first- and second-home mortgages in 103 key cities were 4.35% and 5.07% in June, respectively, down 139 and 93 basis points from the high point in September 2021, hitting a new low since 2019, according to Beike Research Institute. Among them, 74 cities have reached the lower limit of 4.25% for the first and 5.05% for the second housing, the newspaper said.