MNI China Daily Summary: Tuesday, February 6

POLICY: The Chinese regulator will guide institutional investors to further support the domestic A-share market, the China Securities Regulatory Commission said in a statement on Tuesday.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY339 billion via 14-day reverse repo on Tuesday, with the rates unchanged at 1.95%. The reverse repo operation has led to a net drain of CNY224 billion reverse repos after offsetting CNY563 billion maturity today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.9722% from 1.9678%, Wind Information showed. The overnight repo average increased to 1.7233% from the previous 1.6877%.

YUAN: The currency strengthened to 7.1913 against the dollar from 7.1982 on Monday. The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1082, compared with 7.1070 set on Monday. The fixing was estimated at 7.2025 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.4350 up from 2.3950% at Monday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 3.23% to 2,789.49 while the CSI300 index rose 3.48% to 3,311.69. The Hang Seng Index was up 4.04% to 16,136.87.

FROM THE PRESS: Local governments will likely accelerate the issuance of special bonds to fund the construction of major projects, as the pace of issuance in January slowed compared to the same period over the last two years. A total of CNY56.8 billion of new special bonds were issued in January, mainly invested in municipal and industrial park infrastructure and rail transportation. While the issuance in February is expected to reach CNY159.9 billion. The issuance of additional CNY1 trillion of treasury bonds in Q4 2023 for transfer payment to local governments had increased disposable fiscal resources and crowded out some local bonds at the beginning of the year, analysts said. (Source: China Securities Journal)

Local-securities regulators should strengthen coordination with different departments and promote the inclusion of the goal to improve listed companies’ quality into local-government performance assessments, CCTV News reported citing sources from the China Securities Regulatory Commission. Guo Ruiming, head of the CSRC Listing Department said visits to companies showed their demands cover many aspects including bank financing coordination, export convenience and intellectual property protection. The CSRC will work with local-securities regulators to seek solutions down to each company, Guo added.

China’s Bulk Commodity Index (CBMI) reached 101.1 in January, up 0.4 points from December, according to the China Federation of Logistics and Purchasing (CFLP). Sub-indices showed rising commodity supply, sales and inventory, with supply of iron ore and refined oil up 1.8 points, and 1.5 points from December. The bulk commodity sales sub-index reached 100.6, down 0.8 points from the previous month, but above the 100 point expansion threshold. Bulk commodities sales continued to benefited from winter storage demand and pre-holiday purchasing, according to Chen Lin, analyst at the CFLP. (Source: Yicai)