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(U2)‌‌ Extends The Week’s Bear Leg

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     TOPS NEWS: China's GDP increased 6.8% y/y in the first quarter, meeting the
median of a survey of 16 economists conducted by MNI. It was slower than the
6.9% growth in the same period last year, but well above the 6.5% target set by
Premier Li Keqiang at the National People's Congress last month.
     DATA: China industrial output growth slowed to 6.0% y/y in March from the
7.2% y/y gain in Jan-Feb, due to a later start of this year's Chines New Year
holidays that reduced work days in March. Fixed-asset investment increased 7.5%
y/y in the first quarter, falling short of 7.6% projected by the MNI survey,
though property investment growth accelerated. Retail sales grew 10.1% in March,
up from 9.7% in the first two months, and was the highest since 10.2% in
November. Surveyed urban unemployment data were disclosed for the first time
starting this month. The rates were 5.0%, 5.0% and 5.1% respectively for
January, February and March, all lower than the same period last year.
     LIQUIDITY: The PBOC injected CNY367.5 billion by 1-year Medium-term Lending
Facilities (MLF) loans on Tuesday at 3.30%, 5 basis points higher from last
month. Liquidity remains unchanged as the same amount of MLF loans matures and
no reverse repo matures today. CFETS-ICAP's money-market sentiment index closed
at 57 on Monday, up from 38 at Friday's close. 
     MONEY MARKET RATES: 7-day repo average rose to 2.9329% from 2.7591% on
Tuesday, after PBOC skipped open-market operations but injected CNY367.5 billion
loans. The overnight repo average increased to 2.6906% from Monday's 2.5877%.
     YUAN: The yuan rose against the U.S. dollar after PBOC set a stronger daily
fixing. The yuan gained 0.04% to 6.2788 against the U.S. unit, compared with the
official closing price of 6.2811 yesterday. The PBOC set the yuan central parity
rate higher for a second day at 6.2771, compared with Monday's 6.2884. 
     BONDS: The yield on benchmark 10-year China Government Bond was last at
3.6400%, down from the previous close of 3.6500%, according to Wind Information.
     STOCKS: Shares on the Shanghai Stock Exchange lost 1.41% to 3,066.80, the
lowest in two months on concerns of China-U.S. trade spat. Computer applications
industry led the drop by more than 5%, with Fujian Apex Software Corp. down the
daily maximum limit of 10%. Hong Kong's Hang Seng Index fell 0.83% to 30,065.33.
     FROM THE PRESS: China will deliver on its promise to further open up,
Xinhua News Agency reported citing Chinese President Xi Jinping, who spoke
Monday in Beijing while meeting Klaus Schwab, executive chairman of the World
Economic Forum. Anti-globalization and protectionism hurt global economy, Xi
said according to Xinhua.
     Chinese banks should fast expand their credit card and consumer loan
businesses, China Securities Journal reported, citing bank executives and
analysts. The two categories supported banks' profit growth last year, the
newspaper said citing banks' earnings reports. Mortgage loans dropped as a share
of overall bank loans to individuals from 2015-2016 when mortgages were the main
type of consumer lending, the Journal cited Zhang Boyu, an analyst at Everbright
Securities. Consumer and credit card loans can be expanded further as they
generate higher returns for banks, the Journal reported citing Liu Zhiping, an
analyst at Ping An Securities.
     China needs to prevent liquidity-related risks in the interbank markets,
China Securities Journal reported citing Hu Bin, deputy director of National
Institution for Finance and Development. Adjustment in the interbank market
could tighten liquidity and push up interest rate, thus trigger systemic risks,
the newspaper reported citing Ba Jinsong, special researcher of NIFD.
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]

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