MNI China Daily Summary: Thursday, May 23

POLICY: Authorities in China have issued a 22 point guide for cutting costs in the real economy, according to an NDRC notice. On Monetary policy, officials should use "multiple tools" to maintain reasonable and sufficient liquidity, whilst promoting stable and moderate reductions in loan interest rates. SMEs should receive support to reduce FX hedging costs, the notice said.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY2 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The operation has led to no change to the liquidity after offsetting the CNY2 billion maturity today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.8282% from 1.8421% on Wednesday, Wind Information showed. The overnight repo average decreased to 1.7724% from the previous 1.7791%.

YUAN: The currency weakened to 7.2446 against the dollar, from 7.2396 at Wednesday's close. The PBOC set the dollar-yuan central parity rate higher at 7.1098, compared with 7.1077 set on Wednesday. The fixing was estimated at 7.2462 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.3030%, down from Wednesday's close of 2.3085%, according to Wind Information.

STOCKS: The Shanghai Composite Index fell 1.33% to 3,116.39, while the CSI300 index lost 1.16% to 3,641.79. The Hang Seng Index was down 1.70% to 18,868.71.

FROM THE PRESS: China’s trade fundamentals remain good amid strong external demand with Chinese products still benefiting from certain advantages, Securities Daily reported citing Song Siyuan, associate researcher at the Chinese Academy of International Trade and Economic Cooperation. In the first four months, ships, electric vehicles and construction machines grew rapidly, and exports in Yiwu city seized business opportunities brought by the Olympic Games and exported CNY3.1 billion of sporting goods and equipment, a rise of 45.6% y/y, the newspaper said.

EU demand for Chinese goods has not significantly increased despite train freighter prices increasing as much as 20% in May, experts told Yicai. Hao Panfeng, deputy secretary-general of the China Container Industry Association, said exporters had turned to trains after the Red Sea crisis had pushed up shipping rates, but had not seen any significant increase in China Europe trade volumes. Tang Tingting, assistant general manager at Sichuan New Silk Road Multimodal Transport, said EU demand had picked up marginally but did not match the magnitude of the price increases.

Export oriented firms in Guangdong recorded 5.7% electricity growth from January to April, a positive indication of foreign trade development, according to Dong Nan, project manager at the China Southern Power Grid Energy Institute. Export manufacturers electricity demand grew 15.2% y/y across southern China, Dong said, noting strong industrial production and new export sectors will drive steady electricity growth in Q2. (Source: 21st Century Business Herald)