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POLICY: China will strengthen policy in a bid to help the economy grow in “a reasonable range” even though employment and inflation are all under new pressure after the latest outbreak of Covid-19 and the Ukraine crisis, a China Politburo meeting, chaired by President Xi Jinping, said on Friday. According to China Central Television, the meeting stressed the country will strive to control Covid-19, stabilise the economy and securitise development through accelerating expansionary fiscal and monetary policies. Policy will be flexible and will be added based on the needs of realising the targets, the statement noted. China has a growth target of around 5.5% this year.
LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.1%. This keeps the liquidity unchanged after offsetting the maturity of CNY10 billion repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 2.0053% from the 1.9023% on Thursday, Wind Information showed. The overnight repo average increased to 1.7882% from the previous 1.2938%.
YUAN: The currency strengthened to 6.5866 against the dollar from 6.6115 on Thursday. The PBOC set the dollar-yuan central parity rate higher at 6.6177, compared with 6.5628 set on Wednesday.
BONDS: The yield on 10-year China Government Bond was last at 2.8575%, down from Thursday's 2.8650%, according to Wind Information.
STOCKS: The Shanghai Composite Index rallied 2.41% to 3,047.06, while the CSI300 index rose 2.43% to 4,016.24. The Hang Seng Index gained 4.01% to 21,089.39.
FROM THE PRESS: The PBOC is still likely to cut the benchmark Loan Prime Rate by 10 basis points in Q2 to stabilise economic growth, the Economic Information Daily reported citing Wang Qing, chief analyst of Golden Credit Rating. The PBOC may continue to boost targeted support for small businesses and the logistics sector, including increasing the quota of re-lending, the newspaper said citing Wang Yifeng, chief analyst at Everbright Securities. The central bank set up CNY200 billion relending for technological innovation on Thursday and is accelerating the release of CNY100 billion relending for transportation and logistics, which are expected to boost banks’ loan issuance by CNY1 trillion, the newspaper said.
China cut transfer fees for A shares by 50% to 0.01‰ of the transaction amount, the first such cut in nearly seven years to lift investor confidence amid a recent market slump, the Securities Times reported. This will reduce transaction costs for investors by about CNY5 billion per year, based on the CNY256 trillion transaction volume of the Shanghai and Shenzhen stock exchanges in 2021, the newspaper said. Investors were urged to take advantage of the lower fees with the Shanghai Composite Index below 3,000 points, the newspaper said citing Yang Delong, chief economist of First Seafront Fund.
Several cities in China are issuing consumer coupons before the May Day holiday, aiming to boost spending on tourism, appliances, housing and cars, the China Securities Journal reported. Guangdong province will subsidise electric car buyers at CNY8,000 per vehicle in the next two months, and Jiangmen city will distribute 9,000 sets of consumer voucher packages totalling CNY37 million to home buyers, the newspaper said. Shenzhen city has issued CNY400 million of shopping vouchers, CNY60 million of dining vouchers, CNY10 million of tourism vouchers and CNY30 million in digital yuan, the newspaper said.
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