MNI China Daily Summary: Thursday, March 28

     POLICY: China will further the opening up of its bond market to overseas

investors this year and give foreign banks, securities and insurance companies

greater access, Premier Li Keqiang said Thursday at the annual Boao Forum for

Asia. The government will make it easier for foreign companies to establish

investment firms in China, said Li. China will also improve rules on foreign

companies' strategic investment and M&A of Chinese companies, Li said.

     DATA: More cities saw a tentative increase in housing prices in February,

reversing earlier declines, the Securities Times reported citing a monthly

housing report published by National Academy of Economic Strategy under the

Chinese Academy of Social Sciences. The average price across 142 cities surveyed

rose by 0.355% from a month earlier. Prices rose in 94 cities compared to 55 in

January, the report showed.

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations

for the seventh straight trading day, leaving liquidity unchanged as no reverse

repos matured, according to Wind Information. Total liquidity in the banking

system is at a relatively high level, given increased fiscal spending at the end

of the quarter, the PBOC said.

     RATE: The 7-day weighted average interbank repo rate for depository

institutions (DR007) decreased to 2.7300% from Wednesday's close of 2.8550%,

according to Wind Information. The overnight repo average fell to 2.0000% from

Wednesday's 2.2602%.

     YUAN: The yuan depreciated to 6.7288 against the U.S. dollar from

Wednesday's close of 6.7215. The PBOC set the dollar-yuan central parity rate at

6.7141 today, compared with 6.7042 set on Wednesday.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.1025%, up 0.5 bps from Wednesday's close, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index fell 0.92% to 2,994.94. Hong

Kong's Hang Seng Index rose 0.16% to 28,775.21.

     FROM THE PRESS: Loose monetary policy won't help small and medium

enterprises (SMEs) obtain financing, the National Business Daily reported citing

Zhu Min, the head of the Tsinghua PBCSF, a finance school affiliated with the

PBOC. For the past 10 years, a loose monetary policy bias only resulted in

excess liquidity that fueled stock and bond markets instead of supporting SMEs,

Zhu said according to the daily.

     To help the yuan's internationalization, China should take long-term

measures to boost its economy, upgrade financial system, improve financial

supervision, and liberalize interest abd exchange rate, said Guan Tao, a senior

researcher at China Finance 40 Forum in a commentary published on China Forex, a

magazine run by the State Administration of Foreign Exchange.

     China should accelerate the development of small and medium-sized banks to

deepen financial supply-side structural reform, Dong Ximiao, a researcher at

National Institution for Finance and Development, wrote in an op-ed in the

Economic Information Daily. Greater efforts were also needed to promote capital

market reform to boost direct financing while the opening of the financial

sector should also be pushed, Dong wrote.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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