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LIQUIDITY: The People's Bank of China (PBOC) injected CNY110 billion via 7-day reverse repos with the rate unchanged at 2.1%. This led to a net injection of CNY100 billion after offsetting the maturing CNY10 billion reverse repos today, according to Wind Information. The operation aims to keep liquidity stable at the end of mid-year, the PBOC said on its website.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.9698% from the close of 1.9536% on Monday, Wind Information showed. The overnight repo average fell to 1.4267% from the previous 1.4325%.
YUAN: The currency strengthened to 6.6876 against the dollar from Monday's close of 6.6878. The PBOC set the dollar-yuan central parity rate higher at 6.6930 on Tuesday, compared with 6.6850 set on Monday.
BONDS: The yield on 10-year China Government Bonds was last at 2.8860%, up from Monday's close of 2.8700%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged up 0.89% to 3,409.21, while the CSI300 index gained 1.04% to 4,490.52. The Hong Kong's Hang Seng Index rose 0.85% to 22,418.97.
FROM THE PRESS: China’s monetary policy will continue to be accommodative to support economic recovery in the aggregate, while emphasizing the use of structural tools to support SMEs and the green transition, said Governor Yi Gang of the People’s Bank of China in an interview with China Global Television Network. The real interest rate is low after taking into account of inflation, Yi was cited as saying, noting that the current time deposit rate is 1%-2% and bank loan rate is 4%-5%. Inflation outlook is stable in China and maintaining price stability and maximising employment are the PBOC’s high priorities, said Yi.
The PBOC will increase injections via open market operations this week to keep mid-year liquidity stable, the China Securities Journal reported citing analysts. The current liquidity in the banking system is still at a high level and increased fiscal spending and allocated local government special bonds at the month-end will help supplement the liquidity, the newspaper said citing analysts. There won’t be a large liquidity gap into July even when the tax season comes, as accelerated fiscal expenditure will help filling in any gap, the newspaper said citing analysts.
China’s most indebted developer Evergrande faces a winding-up petition in the Hong Kong high court, involving a claim amount of about HKD862.5 million, the 21st Century Business Herald reported citing a company statement. The petition was filed by a strategic investor in the company’s housing trading unit, Fangchebao, which accounts for less than 1% of the company’s total overseas debt, while the operations of the board of directors, risk mitigation committee and management teams have not been affected, the newspaper said citing Xiao En, executive director of Evergrande. The company will object to winding-up and is expected to release a preliminary debt restructuring plan by end-July as scheduled, according to the statement.
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