MNI China Daily Summary: Tuesday, September 13

LIQUIDITY: The People's Bank of China (PBOC) injected CNY2 billion via 7-day reverse repos with the rate unchanged at 2.00%. The operation has led to a net drain of CNY2 billion after offsetting the maturity of CNY4 billion repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.4522% from the close of 1.4454% on Friday, the last working day before the Mid-Autumn Festival, Wind Information showed. The overnight repo average fell to 1.1690% from the previous 1.1702%.

YUAN: The currency weakened to 6.9311 against the U.S. dollar from the previous close of 6.9192. The PBOC set the dollar-yuan central parity rate lower at 6.8928, compared with 6.9098 set on Friday.

BONDS: The yield on the 10-year China Government Bond was last at 2.6480%, up from Friday's close of 2.6430%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.05% to 3,263.80, while the CSI300 index gained 0.42% to 4,111.11. Hong Kong's Hang Seng Index edged down 0.18% to 19,326.86.

FROM THE PRESS: China’s banking authorities will focus on credit expansion, including guiding the Loan Prime Rate lower and stepping up assessments of banks’ loan issuance, the China Securities Journal reported, citing Golden Credit Rating chief analyst Wang Qing. Wang said there was room for additional monetary policy support following the deceleration in the August CPI. Analysts expect September lending data to rebound. Growth in loan balances will likely reverse previous falls, notably in loans related to manufacturing, infrastructure, mortgages, and companies seeking to lower carbon emissions.

The PBOC is likely to keep the rate on the medium-term lending facility (MLF) unchanged on Thursday as liquidity in the inter-bank market is viewed as reasonably ample, the Securities Daily reported. Analysts are divided on how much of a maturing CNY600 billion MLF will be rolled over. Some believe the PBOC will roll over a lower amount given sufficient money supply and liquidity, while others believe a renewed amount of CNY600 billion will help stabilise growth. The one-year MLF rate sits at 2.75% after two 10 bp cuts in August and January.

China will seek to boost consumption and expand effective investment to create demand and accelerate the construction of key projects, CCTV News reported, citing a State Council meeting chaired by Premier Li Keqiang. Policy banks will also increase lending according to local needs. The timely implementation of additional pro-growth policies was possible given stable prices, Li was cited as saying.