MNI China Daily Summary: Tuesday, June 3

     EXCLUSIVE: China will move to recapitalise private and small banks to free

up credit for small businesses hit by coronavirus disruption and sagging global

demand, a People's Bank of China official told MNI, with another senior central

bank manager and a policy advisor noting that exporters will be a particular

focus for assistance.

     LIQUIDITY: The PBOC skipped open market operations on Wednesday, resulting

in a net drain of CNY120 billion given the same amount of reverse repos matured,

according to Wind Information. Total 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) increased to 1.9597% from Tuesday's close 1.5062%, Wind

Information showed. Overnight repo average rose to 1.8728% from 1.4812%

yesterday. 

     YUAN: The yuan strengthened to 7.1099 against the dollar from Tuesday's

close 7.1105. PBOC set the dollar-yuan central parity rate lower at 7.1074,

compared with the 7.1167 set on Tuesday.

     BONDS: The yield on 10-year China Government Bonds was last at 2.7950%,

down from Tuesday's close of 2.8600%, according to Wind Information.

     STOCKS: The Shanghai Composite Index increased 0.07% to 2923.37. Hong

Kong's Hang Seng Index gained 1.37% to 24325.62. 

     FROM THE PRESS: U.S. interference in China's sovereignty affair is pushing

the offshore yuan lower as worried investors sell off Yuan assets, Tu Yonghong,

a deputy director with the International Monetary Institute under Renmin

University, wrote in a commentary in Economic Daily. The recent yuan

depreciation was also due to liquidity injections by the central bank and

China's worsening trade balances, said Tu, adding the yuan is to be stable given

China's sustained economic momentum and improving trade outlook.

     Chinese local governments may increase land sales to developers in the

second half to make up for revenue shortfalls, the 21st Century Business Herald

reported citing an unnamed source. Developers are being spurred by expansionary

monetary policies to buy land at high premiums, the newspaper said citing Zhang

Dawei, the chief analyst with Centaline Property. Official data showed that

Beijing and Shanghai recorded CNY113.1 billion and CNY104.7 billion in land

transactions from January to May, up 58% and 73% respectively from the same

period last year, said the newspaper.

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

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

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