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MNI (London)
     POLICY: Local governments must complete the issuance of new local
government bonds for the whole of 2019 by the end of September, according to a
statement on the website of the Ministry of Finance today.
     DATA: China's April manufacturing PMI slowed to 50.1 after March's 50.5,
missing the MNI-survey median forecast of 50.5, data released by the National
Bureau of Statistics Tuesday showed. The index was in the expansion zone above
50 for the second-straight month, and was at the second highest level since
November 2018, indicating that manufacturing activities are expanding steadily,
according to the NBS. 
     DATA: The Caixin PMI tracking small and medium sized manufacturers which
are not surveyed by the NBS, decelerated 0.6 points to 50.2 in April, remaining
in the expansion zone above 50 for the second consecutive month, Caixin said in
a statement released Tuesday. New export orders fell back into contraction
territory after a small decline, said Caixin. Many manufacturers surveyed said
that weak external demand had dampened export sales at the beginning of Q2,
according to Caixin.
     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations
today, leaving liquidity unchanged as no reverse repos matured, according to
Wind Information, leaving overall total liquidity at a relatively high level due
to increased fiscal spending at the end of the month, according to the PBOC.
     RATE: The 7-day weighted average interbank repo rate for depository
institutions (DR007) decreased to 2.0000% from Monday's close of 2.6976%,
according to Wind Information. The overnight repo average rose to 2.0000% from
1.6885% on Monday.
     YUAN: Dollar-yuan strengthened to 6.7366 against the U.S. dollar from
Monday's close of 6.7350. The PBOC set the dollar-yuan central parity rate at
6.7286 today, compared with 6.7310 on Monday.
     STOCKS: The benchmark Shanghai Composite Index rose 0.52% to 3,078.34. Hong
Kong's Hang Seng Index fell 0.65% to 29,699.11.
     BONDS: The yield on the 10-year China Government Bond was last at 3.3825%,
down from Monday's close of 3.4225, according to brokers. 
     FROM THE PRESS: China is set to lower the rate of employers' contribution
to social insurance to 16% from Wednesday, Securities Daily reported today. The
newspaper cited Wang Qing, chief macroeconomic analyst at credit rating agency
Dongfang Jincheng, who said the move was expected to reduce the financial burden
on enterprises by more than CNY300 billion. The reduction represents a cut of
around 63% after last year's cut of CNY184 billion, the daily said. Wang said
the government may need to transfer more public money to replenish the social
security funds as a result of the unprecedented cut.
     Policymakers should stick to promoting reforms instead of easing liquidity
to stimulate the economy or tightening the credit supply to drive de-leveraging
in the short-term, China Securities Journal said in a commentary today. The
Journal said that while the economy had stabilized it may not rebound strongly
due to domestic and external uncertainty. The commentary called for more
countercyclical macroeconomic policy to help lower the cost of business.
     The rebound in China's housing market has begun to cool after lasting just
over a month, the China News Service reported today. The turnover of established
homes in Beijing, Shanghai, Shenzhen and Guangzhou declined by between 20 to 30%
m/m in April, the newspaper said citing data by the Beike Research Institute
which is affiliated with the Homelink Real Estate Agency. The rapid recovery of
the housing market is not sustainable because financial regulations may be
tightened and mortgage support for first-time home buyers announced at the
beginning of the year may be curbed, the newspaper said citing Xu Xiaole, chief
market analyst at Beike Research Institute.
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
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