MNI China Daily Summary: Tuesday, June 16

     TOP NEWS: The Beijing municipal government said it will rapidly conduct

Covid-19 inspections and sterilize agricultural product markets, restaurants and

canteens, after dozes of those working in the Xinfadi agricultural wholesale

market, located in the city's southwest, tested positive, the Beijing Daily

reported. The tests should cover every person to have entered and exited

Xinfadi, the newspaper reported.

     POLICY: China will issue five-year and seven-year special treasury bonds

for Covid-19 efforts totalling CNY100 billion in bidding on June 18, the first

of its planned CNY1 trillion outlined in Premier Li Keqiang's Government Work

Report last month. Proceeds are for pandemic prevention and economic

development, the Ministry of Finance said. 

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market

operations, draining CNY60 billion from the maturity of reverse repos, according

to Wind Information. Liquidity in the banking system is reasonable and ample,

the PBOC said on its website.

     RATES: The seven-day weighted-average interbank repo rate for depository

institutions (DR007) rose to 1.8641% from 1.7774% on Monday, Wind Information

showed. The overnight repo average increased to 1.7529% from 1.4732%.

     YUAN: The yuan strengthened to 7.0818 against the dollar from 7.0946 on

Monday. PBOC set the dollar-yuan central parity rate lower at 7.0755, compared

with the 7.0902 set on Monday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.8550%, up

from the close of 2.8050% on Monday, according to Wind Information.

     STOCKS: The Shanghai Composite Index rose 1.44% to 2,931.75, tracking gains

from the global markets after the U.S. Federal Reserve widened its bond buying

program. Stocks also received a boost on expectation that Beijing's quick

measures will put a resurgence of coronavirus cases under control. Hong Kong's

Hang Seng Index rallied 2.39% to 24,344.09.

     FROM THE PRESS: China's Loan Prime Rate (LPR) is likely to stay unchanged

on Saturday after the PBOC kept the medium-term lending facility (MLF) rate

unchanged yesterday, the Shanghai Securities News reported citing Wang Qing,

chief analyst with Golden Credit Ratings. In leaving the MLF rate unchanged, the

central bank rolled over the matured CNY740 billion MLFs with another CNY200

billion. The next MLF rate cut may start in August at the latest, and there was

still room for a 40 basis point cut in the second half of the year, the

newspaper cited Wang as saying.

     China's issuance of CNY1 trillion in special Covid-19 treasury bonds will

be completed by the end of July, the 21st Century Business Herald reported

citing an unnamed bond investor in Beijing. The issuance would be CNY700 billion

10-year notes, in addition to CNY200 billion 5-year and CNY100 billion 7-year

notes, the newspaper cited the source as saying. The PBOC is likely to cut

reserve requirement ratios by end-June to fill the liquidity gap caused by the

bond issuance, the newspaper said citing Zhang Xu, chief fixed income analyst at

Everbright Securities.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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