MNI China Daily Summary: Tuesday, July 11

EXCLUSIVE: Many mainland firms listed on the Hong Kong Exchange remain unprepared for incoming sustainability disclosure requirements and must act now to avoid running afoul of the new rules, a prominent policy advisor told MNI.

EXCLUSIVE: China will likely further relax property-market restrictions to prop up the weakening sector in the second half, though the depth of support will depend on growth pressures and any major stimulus should wait until after July’s politburo meeting, policy advisors and market analysts told MNI.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY2 billion via 7-day reverse repos, with the rates at 1.90%. The operation has led no change to the liquidity after offsetting the maturity of CNY2 billion reverse repo today, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.

DATA: China’s new loans and aggregate finance surged more than expected in June, while M2 decelerated on higher base comparisons in the same period last year, People's Bank of China data released Tuesday showed.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.7270% from 1.6978%, Wind Information showed. The overnight repo average increased to 1.1839% from 1.1454%.

YUAN: The currency strengthened to 7.1985 against the dollar from 7.2331. The PBOC set the dollar-yuan central parity rate lower at 7.1886, compared with 7.1926 set on Monday. The fixing was estimated at 7.2152 by BBG survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.7025%, down from Monday's close of 2.7075%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.55% to 3,221.37, while the CSI300 rose 0.65% to 3,869.49. The Hang Seng Index was up 0.97% to 18,659.83.

FROM THE PRESS: Authorities have extended 16 property-sector support measures introduced last November until the end of 2024, according to a notice on the People's Bank of China website. Analysts interviewed by Yicai said the real-estate sector will benefit from reduced financial pressure, allowing banks to lend more due to reduced risk exposure. Wang Qing, chief macro analyst at Dongfang Securities, predicted the sector could stabilise and achieve a soft landing with a continuation of support measures, which include extension on loan repayments. (Source: Yicai)

China should adopt loose monetary policy and proactive fiscal policy to promote economic recovery and tackle low inflation, wrote Ming Ming, chief economist at CITIC Securities in a commentary. CPI came in at 0% y/y in June as low pork and vegetable prices, and weak recovery in consumer goods amid rising precautionary savings weigh on consumer prices. Policymakers should take targeted measures to improve market expectations, including increasing consumers’ disposable income and offering refinancing tools, tax and fee reductions to businesses. While monetary policy should meet credit needs and maintain stable liquidity while avoiding liquidity traps, said Ming. (Source: 21st Century Business Herald)

The National Development and Reform Commission will promote macro policies to support the private sector's recovery, following an exchange session between private firm chiefs and Zheng Shanjie, director at the NDRC. Zheng said the NDRC in future would coordinate with other departments to create a strong policy environment for private enterprises to develop, and continue engaging with, the sector to better understand concerns. Private company leaders from different sectors were invited including Baidu Group and Longji Green Energy. (Source: 21st Century Herald)