MNI China Daily Summary: Thursday, March 6
EXCLUSIVE: China’s stronger fiscal stimulus will see steel rebar demand bottom out this year after falling 20% since 2020, driven by greater near-term demand for infrastructure, a Chinese commodities expert told MNI, noting vanadium appetite could also rise sharply over the next few years.
POLICY: The People’s Bank of China (PBOC) will launch a technology board in the bond market in a bid to further increase financial support for tech innovation, said PBOC Governor Pan Gongsheng at a press conference during the National People's Congress (NPC).
POLICY: The PBOC will lower the reserve requirement ratio (RRR) and interest rates at an appropriate time, said PBOC Governor Pan.
POLICY: Beijing has reserved sufficient policy space and reserve tools to deal with possible internal and external uncertainties, Finance Minister Lan Fo’an told a press conference during the NPC.
LIQUIDITY: The PBOC conducted CNY104.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY110.5 billion after offsetting the maturity of CNY215 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.7867% from 1.7739% previously, Wind Information showed. The overnight repo average increased to 1.7837% from the previous 1.7613%.
YUAN: The currency strengthened to 7.2428 against the dollar from the previous 7.2580. The PBOC set the dollar-yuan central parity rate lower at 7.1692, compared with 7.1714 set on Wednesday. The fixing was estimated at 7.2398 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.7226%, up from the previous close of 1.7025%, according to Wind Information.
STOCKS: The Shanghai Composite Index rose 1.17% to 3,381.10, while the CSI300 index increased 1.38% to 3,956.24. The Hang Seng Index rallied 3.29% to 24,369.71.
FROM THE PRESS: China should establish a stock market stabilisation fund to provide liquidity during periods of intense volatility, given the economy faces external shocks and domestic pressures this year, said Tian Xuan, delegate at the National People’s Congress. Officials need to clarify the fund's legal status and operating rules, and raise capital through fiscal appropriation, issuing special treasury bonds, participating financial institutions, as well as set up a management committee to carry out daily operations and information disclosure, Tian said. (Source: 21st Century Business Herald)
Officials need to consider expanding the national trade-in scheme to include a wider range of products with broad market demand, as well as relax subsidy conditions, said Yin Yanlin, a member of the 14th National Committee of the Chinese People's Political Consultative Conference. China should reduce consumption restrictions while expanding consumer goods imports to maintain domestic purchasing power. (Source: QSTheory.cn)
China’s public investment could total CNY31 trillion over the next five years, including funds for upgrading urban areas and supporting migrant workers, according to Zhang Bin, member of the National Committee of the Chinese People's Political Consultative Conference. Zhang, who is also a senior researcher at the China Finance 40 Forum, said the government should focus on public service investment to boost domestic activity as the private sector faces an insufficient demand spiral in the short term.