MNI China Daily Summary: Thursday, September 19
EXCLUSIVE: China's Loan Prime Rate is expected to hold steady on Friday despite recent data revealing significant economic challenges ahead and increasing expectations of a rate and reserve requirement ratio cut later this year supported by the Federal Reserve’s recent move lower. The one-year LPR will remain at 3.35% and the five-year rate will hold steady at 3.85%.
POLICY: China's top economic planner said Thursday it will increase policy reserves and launch a batch of additional measures that are operational and effective in a timely manner, according to Jin Xiandong, spokesman of the National Development and Reform Commission.
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY523.6 billion via 7-day reverse repos, with the rate unchanged at 1.70%. The operation led to a net injection of CNY362.8 billion after offsetting CNY160.8 billion maturities, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.9717% on Thursday from 1.8840% previously, Wind Information showed. The overnight repo average increased to 1.8906% from the previous 1.7779%.
YUAN: The currency strengthened to 7.0660 against the dollar, from 7.0893 at Wednesday's close. The PBOC set the dollar-yuan central parity rate higher at 7.0983, compared with 7.0870 set on Wednesday. The fixing was estimated at 7.0984 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 2.0425%, up from Wednesday's close of 2.0400%, according to Wind Information.
STOCKS: The Shanghai Composite Index gained 0.69% to 2,736.02, while the CSI300 index edged up 0.79% to 3,196.04. The Hang Seng Index rallied 2.00% to 18,013.16.
FROM THE PRESS: China will promote state-owned enterprises to invest in the capital market by focusing on long-term capital, the State Council executive meeting said on Wednesday. Authorities will improve policies related to SOE investment and support domestic and overseas listings for qualified technology firms. Additionally, the government will develop equity transfers and the merger and acquisition market, and encourage private capital to establish market-oriented M&A funds to promote the venture capital industry, the meeting said. (Source: Xinhua News Agency)
Recent data showed authorities need to increase counter-cyclical measures to achieve the annual economic growth target of about 5%, given increasing pressure in Q3, experts interviewed by Yicai said. Wang Qing, chief macro analyst at Orient Securities, said August's macro data showed a downward trend from Q2, with weak consumption and private investment. Authorities are likely to issue more treasury bonds, cut interest rates and further lower newly issued residential mortgages to stimulate the economy, Wang expected.
China’s Inclusive Finance Prosperity Index reached 48.4 points for August, down 0.4 points from July, data from the China Economic Information Service and China Association of Small and Medium Enterprises showed. Loan balances of technology-based SMEs, specialized and new enterprises and micro loans increased by 21.2%, 14.4%, and 16.0% y/y. The index tracks the financing and development of SMEs, and industrial and commercial households. (Source: Securities Daily)