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Free AccessMNI China Daily Summary: Thursday, May 26
POLICY: The People’s Bank of China (PBOC) pledged to further expand credit to support small and micro businesses, including a cut in the reserve requirement ratio and increased relending, according to a statement on Thursday on its website. The PBOC will make good use of facilities, such as an RRR cut, relending and rediscounting as well as targeted lending tools for SMEs in a bid to ensure ample funding and smooth lending channels, according to the statement.
LIQUIDITY: The PBOC injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.1%. This keeps the liquidity unchanged after offsetting the maturity of CNY10 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 1.6686% from 1.6970% on Wednesday, Wind Information showed. The overnight repo average rose to 1.3598% from the previous 1.3451%.
YUAN: The currency weakened to 6.7381 against the dollar from 6.6737 on Wednesday. The PBOC set the dollar-yuan central parity rate higher at 6.6766, compared with 6.6550 set on Wednesday.
BONDS: The yield on 10-year China Government Bond was last at 2.7400%, down from the previous close of 2.7600%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged up 0.50% to 3,123.11, while the CSI300 index gained 0.25% to 3,993.04. Hang Seng Index fell 0.27% to 20,116.20.
FROM THE PRESS: All departments and local authorities must urgently ensure the economy achieves reasonable growth in Q2, and the unemployment rate drops as soon as possible, Xinhua News Agency reported citing Chinese Premier Li Keqiang speaking at a meeting with thousands of local officials on Wednesday. Detailed pro-growth policies should be released before end-May, as China must seize the current time window and strive to bring the economy back to normal track, according to Li. The State Council will send inspection groups to 12 provinces to oversee the implementation of policies, Xinhua cited Li as saying.
China will increase policy intensity following high-level calls to stabilise economic growth at a quicker pace, likely including the issuance of special treasury bonds to stimulate consumption and support investment, and use of funds to boost credit, Yicai.com reported citing Lian Ping, head of Zhixin Investment Research Institute. The central bank may further reduce the deposit reserve ratio and interest rate if necessary and use structural tools, said Lian. China should increase rescue efforts to accelerate the resumption of production and ensure smooth traffic and logistics for supply chain stability, said Yicai citing Wen Bin, chief researcher of China Minsheng Bank.
Banks in Shanghai should ensure stable credit growth by supporting the reasonable financing needs of real estate developers and construction companies, and better meeting credit demand of homebuyers, according to a statement on the People’s Bank of China Shanghai head office. Banks should not blindly cut off loans to companies affected by the pandemic, especially smaller businesses, and should help them ease financial pressure with loan extensions, renewals or adjusting repayment plans, the statement said.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.