MNI China Daily Summary: Thursday, July 27

POLICY: Chinese banks’ bad loan ratio remained low in the first half of the year, while growth in net profits decelerated, officials at National Administration of Financial Regulation told reporters in a briefing.

POLICY: China’s banking regulator will guide lenders to increase lending to consumers for spending on big-ticket items and for the consumer service sector, officials at the National Administration of Financial Regulation told reporters in a briefing.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY114 billion via 7-day reverse repos with the rate unchanged at 1.90%. The operation has led to a net injection of CNY88 billion after offsetting the maturity of CNY26 billion reverse repo today, according to Wind Information. The operation aims to keep month-end liquidity stable, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.8268% from 1.8435%, Wind Information showed. The overnight repo average decreased to 1.3904% from the previous 1.4547%.

YUAN: The currency strengthened to 7.1404 against the dollar from 7.1514 on Wednesday. The PBOC set the dollar-yuan central parity rate lower at 7.1265, compared with 7.1295 set on Wednesday. The fixing was estimated at 7.1441 by BBG survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.6900%, down from Wednesday's close of 2.7000%, according to Wind Information.

STOCKS: The Shanghai Composite Index closed down 0.20% at 3,216.67, while the CSI300 index decreased 0.12% to 3,902.35. The Hang Seng Index was up 1.41% to 19,639.11.

FROM THE PRESS: China will deepen SOE reforms in H2 to deliver high-quality development, according to the State-owned Assets Supervision and Administration Commission (SASAC). During a recent seminar, leaders said SASAC will guide SOE investment into infrastructure and industrial projects that are conducive to local economic and social development and have a strong multiplier effect. SOEs will then enhance the resilience of the industrial chain, unleash the vitality of technological innovation and accelerate the green transformation of traditional industries. (Source: Yicai)

China Securities Regulatory Commission may introduce more abundant financial tools to meet the financing needs of real-estate companies and help resolve debt risks of local-government financing vehicles, said Zhang Jun, chief economist at Galaxy Securities. The politburo meeting this week emphasised the importance of maintaining the stable and healthy development of the real estate market and preventing local-debt risks with a package of debt-resolving plans. The capital market can help alleviate pressure on LGFVs in debt-strapped regions by revitalising outstanding assets via asset securitisation, said Zhang. (Source: 21st Century Business Herald)

Retail buyers purchased 1,122,000 passenger cars over July 1-23, a 2% increase y/y but 7% fall m/m, according to data released from the Car Passenger Association. Buyers of new energy vehicles (NEVs) purchased 442,000 units, up 23% y/y but declined 2% m/m. According to Yicai, car buyers typically decrease purchases in July, with consumers restricted from visiting stores due to hot weather. The news agency noted authorities maintained strong local stimulus policies and consumers are beginning to buy after ending their wait-and-see approach. (Source: Yicai)