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POLICY: The Chinese economy is accelerating from months of strict pandemic restrictions, with the latest view on manufacturing and services now well into expansion territory, but further pro-growth policies are required to keep the momentum, according to analysts.
POLICY: The U.S. should stop sanctioning Chinese companies for reasons related to Russia and Iran, Shu Jueting, spokeswoman of the Ministry of Commerce said at a briefing, adding that China will take necessary measures to resolutely safeguard the legitimate rights and interests of its enterprises.
DATA: The China Purchasing Managers' Index (PMI) rose to 50.2 in June from May's 49.6, rebounding to a four-month high, as economic recovery has accelerated on the improved epidemic situation and implemented pro-growth policies, data from the National Bureau of Statistics showed. The non-manufacturing PMI increased by 6.9 points to 54.7, rebounding significantly for the second month, as service activities jumped by 7.2 pps to 54.3 as the epidemic eased nationwide.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY80 billion via 7-day reverse repos with the rate unchanged at 2.1%. This led to a net injection of CNY70 billion after offsetting the maturing CNY10 billion reverse repos today, according to Wind Information. The operation aims to keep liquidity stable at the end of mid-year, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.2914% from 2.0565% on Wednesday, Wind Information showed. The overnight repo average rose to 1.9306% from the previous 1.3482%.
YUAN: The currency strengthened to 6.6943 against the dollar from 6.6972 on Wednesday. The PBOC set the dollar-yuan central parity rate higher at 6.7114, compared with 6.7035 set on Wednesday.
BONDS: The yield on 10-year China Government Bond was last at 2.8600%, down from the previous close of 2.8750%, according to Wind Information.
STOCKS: The Shanghai Composite Index gained 1.10% to 3,398.62, while the CSI300 index rose 1.44% to 4,485.01. Hang Seng Index edged down 0.62% to 21,859.79.
FROM THE PRESS: The PBOC will increase the intensity of prudent monetary policy, focusing on stabilising prices and safeguarding employment, the 21st Century Business Herald reported citing a statement on the central bank website following the Q2 meeting of the PBOC’s Monetary Policy Committee. Compared to the Q1 meeting, the PBOC’s new emphasis is to stabilise employment and prices and ensuring economic development, the newspaper said. The PBOC will boost overall demand via aggregate policies, while increasing support for key areas and weak links through structural tools, the newspaper said citing Wen Bin, chief economist of Minsheng Bank.
The sales of Chinese local government bonds in June is expected to reach a single-month record high of CNY1.93 trillion, in a bid to help stabilise the economy, the China Securities Journal reported. The weekly issuance had exceeded CNY500 billion over the past three weeks, which is rare, the newspaper said citing analysts. So far this year, a total CNY5.25 trillion of local government bonds have been issued, the newspaper said. For H2, policymakers should consider front-loading some quota of next year’s local government special bonds to this year, as Minister of Finance Liu Kun previously pledged to plan incremental policies and intensify macro policies, the newspaper said citing analysts.
China removed the asterisk mark in its travel code which was used to flag people who have been, or even just passed by a mid- or high-risk cities or areas in the past 14 days, so to facilitate domestic travel, Yicai reported citing a statement from the Ministry of Industry and Information Technology on Wednesday. The search volume of air tickets on the online travel platform Qunar increased by 60% within 30 minutes following the new rule, while that of hotels doubled, and that of train tickets rose by up to 1.5 times, the newspaper said citing data by Qunar. However, residents in medium and high-risk areas still need to follow the travel restrictions and quarantine requirements unified nationwide, the newspaper said.
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