MNI China Daily Summary: Tuesday, February 28

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY481 billion of operations via 7-day reverse repos, with the rates unchanged at 2.00%. The operation led to a net injection of CNY331 billion after offsetting the maturity of CNY150 billion reverse repos today, according to Wind Information. The operation aims to keep banking system liquidity stable towards the end of month, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.4209% from the close of 2.2946% on Monday, Wind Information showed. The overnight repo average was up to 2.0961% from the previous 1.8317%.

YUAN: The currency strengthened to 6.9392 against the U.S. dollar from the previous close of 6.9645. The PBOC set the dollar-yuan central parity rate lower at 6.9519 on Tuesday, compared with 6.9572 set on Monday.

BONDS: The yield on the 10-year China Government Bond was last at 2.9120%, down from the close of 2.9315% on Monday, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.66% to 3,279.61, while the CSI300 index was up 0.63% to 4,069.46. Hong Kong's Hang Seng Index was down 0.79% to 19,785.94.

FROM THE PRESS: Shanghai’s economy will grow 5.3% in 2023, with consumption and investment playing an important role in driving high-quality development, according to a report by the Economic Research Institute of the Shanghai Academy of Social Sciences. The report notes the resilience of the local economy in 2022 as reasons to be optimistic about this year's prospects, with statistics showing the financial industry grew 6.1% last year. Service industries achieved a year-on-year growth of 5.3%. The institute recommended more policies to stimulate consumption, lower mortgage rates, and invest in new industries. (Source: 21st Century Herald)

Local government bond issuance was CNY643.5 billion in January, according to the Ministry of Finance. China Securities News said data for February was also high, with CNY576.1 billion issued so far, including CNY335.753 billion yuan of new special bonds. Analysts interviewed by the paper said it was important to ensure the funds raised were used efficiently, and early issuance will help to stabilise growth this year and provide a backstop for the economy. One economist predicted infrastructure investment in the first quarter would grow at a double-digit rate.

Second hand property transactions in Shenzhen last week were up 24.4% y/y, indicating upward momentum in the local property market, according to the Securities Times. New-build sales so far in February are up 25% on last month, with some real estate agencies beginning to recruit more staff to deal with increased activity. Although prices have risen 10% off last year's lows, they are still way below the peak. Local insiders told the paper the majority of the increased sales is due to a backlog of eager sellers willing to transact at a knockdown price. Experts said the long term rebound depends on if the economic recovery will lead to improved confidence.