MNI China Daily Summary: Tuesday, March 29

POLICY: The city of Shanghai has introduced a support package for businesses impacted by measures to contain an outbreak surge in Covid-19 cases, an official said at a briefing on Tuesday. Shanghai will offer value-added tax rebates to small businesses, extend tax deadlines, and provide six months of rent relief to businesses renting government-owned properties, Ruan Qing, an official with the local branch of the National Development and Reform Commission.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY150 billion via 7-day reverse repos with the rates unchanged at 2.10%. The operation has led to a net injection of CNY130 billion after offsetting the maturity of CNY20 billion repos today, according to Wind Information. The operation aims to keep liquidity stable at the end of the quarter, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 2.1816% from the close of 2.1891% on Monday, Wind Information showed. The overnight repo average fell to 1.6931% from the previous 1.9030%.

YUAN: The currency weakened to 6.3722 against the dollar from Monday's close of 6.3702. The PBOC set the dollar-yuan central parity rate lower at 6.3640 on Tuesday, compared with 6.3732 set on Monday.

BONDS: The yield on 10-year China Government Bonds was last at 2.8025%, down from Monday's close of 2.8040%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.33% to 3,203.94, while the CSI300 index lost 0.35% to 4,134.14. The Hong Kong's Hang Seng Index gained 1.12% to 21,927.63.

FROM THE PRESS: The Shanghai government will introduce policies to help businesses deal with the stringent anti-Covid measures the city has taken, including tax and rent relief programs, Yicai.com said citing a government meeting held on Monday. The city government will help businesses stabilize production and strengthen their industrial supply chain, it said. Shanghai has also taken measures to boost the city's Covid testing capabilities, including quicker approvals of laboratories to carry out nucleic acid tests, it said.

Smaller businesses in China are calling for greater support from the government to deal with the impact of anti-Covid measures, the Securities Times reported. A week-long lockdown in Shenzhen, one of China’s top four megacities, has caused prolonged difficulties to SMEs and the service industry, and rescue measures should be strengthened including considering direct cash support, the newspaper said. Shenzhen has cut rents, lower social security costs, subsidize corporate spending on disinfection and increase financing guarantee support, but some businesses said the measures are not strong and targeted enough, the newspaper said.

China's aggregate finance may exceed CNY3.5 trillion in March, a jump from February’s disappointing CNY1.19 trillion, following top policymakers’ call to maintain moderate growth in credit and social financing, the Securities Daily reported citing analysts. Local government special bonds and corporate bond financing are expected to increase, though the credit demand of residents and enterprises may be muted amid more financial market volatility and rising energy and raw material prices, the newspaper citing Zhou Maohua, a researcher at Everbright Bank. New loans may also improve from February’s CNY1.23 trillion to as much as CNY3 trillion, the newspaper said citing Essence Securities.