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     TOP NEWS: The People's Bank of China (PBOC) is increasing liquidity
injections to ease tight credit conditions and stabilize the economy. However,
as Chinese financial regulators continue to implement 'de-risking' measures, the
impact of these liquidity injections has so far been minimal, as major
refinancing channels are restricted and lenders' risk appetite is relatively
depressed, sources have told MNI.
     LIQUIDITY: The PBOC injected CNY70 billion via its 7-day reverse repos and
CNY30 billion via its 14-day reverse repos on Thursday to cushion the impact of
bond issuance payments and maturations of reverse repos, according to a
statement on the PBOC's website. The PBOC injected net CNY70 billion as a total
of CNY30 billion reverse repos matured today. CFETS-ICAP's money-market
sentiment index closed at 33 on Wednesday, down from 37 on Tuesday.
     MONEY MARKET RATES: Benchmark 7-day deposit repo average fell to 2.6370% on
Thursday from 2.6640% on Wednesday; Overnight average decreased to 2.3929% from
2.4819% on Wednesday: Wind Information.
     YUAN: The yuan declined against the U.S. dollar to 6.7227 from the previous
close of 6.7145. The PBOC set the central parity rate at 6.7066, weaker than
Wednesday's 6.6914. Today's fixing is the lowest since Aug 9, 2017. USDCNH just
broke the 6.7800 level, dropping 400bps within the day, with no end in sight to
the yuan's drop. 6.9000 remains the measured move target from the July range and
the fundamentals seem to support such a move given the ongoing collapse in
interest rate swaps relative to the US.
     BONDS: The yield on benchmark 10-year China Government Bond was last at
3.4400%, down from the previous close of 3.4700%, according to Wind Information.
     STOCKS: Shares in Shanghai continued to decline as persistent yuan weakness
hit airline stocks. Shanghai Composite Index shed 0.53% lower at 2772.55,
marking the fifth consecutive session of losses. Hong Kong's Hang Seng Index
declined 0.24% to 28049.90.
     FROM THE PRESS: The PBOC has advised banks to provide medium-term lending
facility (MLF) funds for primary dealers to support loan placement and bond
investment, 21st Century Business Herald reported, citing financial
professionals. Additional MLF funding will be allocated to lower-rated bonds to
alleviate the impact of frequent bond risks, the newspaper said. The PBOC's move
signals the end of its "loose currency and tight credit" policy, said Ding
Anhua, chief economist of China Merchants Bank, according to the newspaper. The
PBOC will not reverse its monetary policy, but may use some instruments to
cushion the pressure on the economy in the third and fourth quarters, the
newspaper said, citing an anonymous analyst.
     China Banking Regulatory Commission (CBRC) has urged financial institutions
to increase loans and cut financing costs for private, small- and micro-sized
enterprises, reported Xinhua News Agency. Large and medium-sized banks should
lead the way in increasing loans to small- and micro-sized enterprises, and
should establish proper and preferential loan prices to bring down the lending
rate, Xinhua said. Financial institutions should also categorize enterprises and
tailor their services and policies to individual businesses, Xinhua added.
     Local governments are still in charge of approving loan contracts for
shantytown renovation projects, Xinhua News Agency reported, citing a manager of
China Development Bank (CDB). The CDB has not tightened approvals for shantytown
renovation projects, but will review the contracts after local governments'
approvals to prevent excessive borrowing and potential risks, Xinhua said,
citing the manager. Local governments have issued a total of CNY460.9 billion in
loans as of the end of June this year, the manager noted, according to Xinhua.
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]

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