MNI China Daily Summary: Wednesday, March 31

LIQUIDITY: Liquidity conditions were little changed across China's interbank money markets in March as the People's Bank of China kept a firm grip on policy levers, the latest MNI Liquidity Conditions Index shows. The Liquidity Condition Index eased lower for a second month, falling to 26.2 in March from 31.6 in February, with just over half of the traders surveyed reporting better condition compared to last month.

LIQUIDITY: The PBOC injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.2% on Wednesday. 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.

DATA: China's manufacturing activity as measured by the Purchasing Manager Index (PMI) rose to 51.9 in March from 50.6 in February, reaching a three-month high as manufacturers accelerated their production after the Chinese New Year holidays, the National Bureau of Statistics said today. The PMI registered a 13th-month expansion above the breakeven 50.0.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.2855% from the close of 2.2434% on Tuesday, Wind Information showed. The overnight repo average fell to 1.8402% from the previous 1.9608%.

YUAN: The currency strengthened to 6.5566 against the dollar from 6.5677 on Tuesday. The PBOC set the dollar-yuan central parity rate higher for a sixth day at 6.5713, compared with the 6.5641 set on Tuesday.

BONDS: The yield on the 10-year China Government Bond was last at 3.2350%, down from Tuesday's close of 3.2450%, according to Wind Information.

STOCKS: The Shanghai Composite Index declined 0.43% to 3,441.91, while the CSI300 index lost 0.91% to 5,048.36. Hang Seng Index fell 0.70% to 28,378.35.

FROM THE PRESS: The PBOC is likely to inject more liquidity in April via reverse repos and medium-term lending facilities to meet demand for tax payments and the issuance of local government debts, the China Securities Journal reported citing analysts. There will be a liquidity gap of around CNY300 billion in the banking system if the PBOC doesn't make any injections, the newspaper said citing Sun Binbin, analyst at Tianfeng Securities. The PBOC has made no net injections in the past three weeks, the newspaper said.

China will step up support for small businesses, including providing more financial and fiscal support, to revive weak private investment and further this year's growth momentum, the Economic Information Daily said in an analysis of the current state of the economy. While growth is likely to exceed 10% in Q1, partly due to last year's lower base of comparison, central and local planning and finance officials are urging quicker starts for infrastructure investment projects and more tax cuts to prevent a slowdown later this year, the newspaper said.

Postal Savings Bank of China led the country's top six national banks with 5% growth in net profits last year, followed by Bank of China with 3% while the other four including ICBC registered around 1%, the 21st Century Business Herald reported citing the annual reports. Profits of the six majors totaled CNY1.34 trillion, it said. The China Construction Bank saw its NPL rise by 0.14 percentage point to 1.56%, and increased provisions dragged its profit growth to 1.6% from 5.3% in the previous year, the newspaper said.

China will promote high-quality development of the central region and the greater opening of inland provinces, according to a statement on the government website following a top Politburo meeting chaired by President Xi Jinping on Tuesday. The Central region should focus on building modern industries supported by advanced manufacturing along with the urbanization of the Central Plains, the statement said. The region should promote low-carbon industries and environmentally sound development, the government said.