MNI China Daily Summary: Thursday, June 8

POLICY: The People Bank of China (PBOC) can keep the yuan stable with sufficient policy tools and expects the U.S dollar to lose momentum in future, said Deputy Governor Pan Gongsheng Thursday during the Lujiazui Forum in Shanghai.

POLICY: The PBOC will continue to provide low-cost funds to support carbon-emission reduction and green-energy expansion to meet transition targets, said Governor Yi Gang Thursday during the Lujiazui Forum in Shanghai.

POLICY: Authorities will improve access to credit and insurance services to help exporters stabilise orders, said Li Yunze, head of the National Financial Regulatory Administration.

LIQUIDITY: The PBOC conducted CNY2 billion via 7-day reverse repos, with the rates unchanged at 2.00%. The operation kept the liquidity unchanged after offsetting the maturity of CNY2 billion reverse repo today, according to Wind Information. The operation aims to keep banking system 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 1.7966% from 1.8250%, Wind Information showed. The overnight repo average decreased to 1.3332% from the previous 1.3915%.

YUAN: The currency weakened to 7.1275 against the dollar from 7.1260 on Wednesday. The PBOC set the dollar-yuan central parity rate higher at 7.1280, compared with 7.1196 set on Wednesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.7400%, up from Wednesday's close of 2.7350%, according to Wind Information.

STOCKS: The Shanghai Composite Index closed up 0.50% at 3,213.59, while the CSI300 index increased 0.81% to 3,820.19. The Hang Seng Index was up 0.25% to 19,299.18.

FROM THE PRESS: Car buyers in China purchased 1.76 million units in May, up 30% y/y and 8% m/m, according to the Passenger Association of China. Within the data, the market for new energy vehicles also expanded, with buyers purchasing 557,000 units, up 55% y/y and 6% m/m. The public increased buying in May following government policies to boost consumption and the resumption of auto-shows, the association said. Major manufacturers sold 16,809 excavators in May, down 18.5% y/y, according to the China Construction Machinery Industry Association. Within the data, domestic buyers purchased 6,592, down 45.9% y/y, while exports totalled 10,217 units up 21% y/y. (Source: Yicai)

China’s exports will remain depressed for some time following May’s decrease of 7.5%, as the global demand for electronic products remains sluggish, according to the 21st Century Herald. However automobile exporters will continue to sell strongly abroad, with the Passenger Association of China predicting exports will reach 4 million units by the end of 2023 to overtake Japan as the world's largest auto exporter. (Source: 21st Century Herald)

China’s FX reserves will remain stable despite decreasing USD28.26 billion, or 0.88%, in May, according to the State Administration of Foreign Exchange (SAFE). The People’s Bank of China (PBOC) increased its gold holdings, plus the dollar index strengthening were cited as reasons for the reserve fall, the 21st Century Herald said. Looking forward, the economic recovery would maintain FX reserve stability of over USD3 trillion, which would deter speculators from shorting the currency, the paper said.