MNI China Daily Summary: Tuesday, April 2

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY2 billion via 7-day reverse repos, with rates unchanged at 1.80%. The operation led to a net drain of CNY148 billion after offsetting CNY150 billion in maturities, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.8505% from 1.8734%, Wind Information showed. The overnight repo average fell to 1.7010% from 1.7204%.

YUAN: The currency weakened to 7.2354 from 7.2293 at Monday's close. The PBOC set the dollar-yuan central parity rate higher at 7.0957, compared with 7.0938 set on Monday. The fixing was estimated at 7.2373 in a Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.3075%, down from Monday's close of 2.3080%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.08% to 3,074.96 while the CSI300 index fell 0.42% to 3,580.68. The Hang Seng Index gained 2.36% to 16,931.52.

FROM THE PRESS: Upper tier-two city Zhengzhou will allow the local government financing vehicle Zhengzhou Urban Development Group the right to purchase established housing to support residents in “selling old buy new,” Yicai.com reported. The company plans to buy and transform commercial property less than 20 years old into affordable rental housing. The government will also offer a 30% tax subsidy for persons who replace current property with new homes. The city plans to complete the replacement of 10,000 second-hand houses this year to activate demand.

The yuan will be supported by economic fundamentals should data continue an upward trend from the start of this year, according to Guan Tao, former director of the international payment department at the State Administration of Foreign Exchange. Guan said Jan-Feb results showed supply and demand were better balanced, and noted PMI for new export orders reached 51.3%, indicating strong external demand. When analysing the yuan FX rate, investors should not only look at Fed policy, but also consider the speed and quality of China’s economic performance, he added. (Source: Yicai)

The government expects China’s cross-border passenger flows during the Tomb Sweeping Day holiday will reach 1.78 million, up 74.5% y/y, according to a forecast by the National Immigration Administration. In particular, analysts expect a significant increase in residents from Hong Kong, Macao and Taiwan returning to hometowns for ancestor worship. (Source: 21st Century Business Herald)