MNI China Daily Summary: Tuesday, April 21

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations

for the fourth day, leaving liquidity unchanged, according to Wind Information.

Liquidity in the banking system is reasonable and ample, the PBOC said on its

website.

     RATES: The seven-day weighted average interbank repo rate for depository

institutions (DR007) fell to 1.2737% from 1.4192% on Monday, Wind Information

showed. The overnight repo average increased to 0.8937% from 0.8891%.

     YUAN: The yuan weakened to 7.0876 against the dollar from 7.0755 on Monday.

PBOC set the dollar-yuan central parity rate higher at 7.0752, compared with

7.0657 set on Monday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.5650%,

down from the close of 2.5800% on Monday, according to Wind Information.

     STOCKS: The Shanghai Composite Index lost 0.90% to 2,827.01. Hong Kong's

Hang Seng Index tumbled 2.20% to 23,793.55.

     FROM THE PRESS: China's economy may not recover to normal level in Q2 given

uncertainties including overseas pandemic situation, wrote Sheng Songcheng, a

former director of the Survey and Statistics Division of the PBOC and now an

advisor to the Shanghai government, in China Business News. Assuming 3% is

achievable and the economy expands 6% and 7.7% in Q3 and Q4, full-year growth

may reach 3%, Sheng wrote. While Q1 growth was -6.8%, historically the later

quarters of the year contributed to greater shares of the full-year growth, he

said. Investments, including those in the real estate, will play a bigger role

as the virus outbreak reduced people's incomes, while the pandemic impacts net

exports, Sheng wrote. 

     The market expects the central bank to further trim the new market oriented

Loan Prime Rate (LPR) by at least 50 bps in 2020, according to a commentary

published by China Securities Journal. The PBOC has cut the 5-year LPR by 10 bps

yesterday, half the cut to the 1-year term LPR, indicating that the central

government has stuck to the view that "houses are for living and not for

speculation". The Journal characterised this as a hawkish attitude toward the

real estate market.

     Wuhan city will issue CNY500 million worth of coupons to citizens to boost

spending in restaurants, shopping malls and supermarkets and also in areas of

culture, sports and tourism, the Securities Times reported. Meanwhile, merchants

will also distribute vouchers with a total value of CNY1.8 billion to Wuhan

citizens, the newspaper said. These coupons will be more effective in driving

consumption than issuing cash as Chinese people tend to save money, the

newspaper said citing Tao Jin, senior researcher at the Suning Financial

Research Institute.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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