MNI China Daily Summary: Tuesday, July 12

LIQUIDITY: The People's Bank of China (PBOC) injected CNY3 billion via 7-day reverse repos with the rate unchanged at 2.1% on Tuesday. This keeps the liquidity unchanged after offsetting the maturity of CNY3 billion repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.5399 from the close of 1.5504% on Monday, Wind Information showed. The overnight repo average fell to 1.2063% from the previous 1.2199%.

YUAN: The currency weakened to 6.7345 against the dollar from Monday's close of 6.7051. The PBOC set the dollar-yuan central parity rate higher at 6.7287 on Tuesday, compared with 6.6960 set on Monday.

BONDS: The yield on 10-year China Government Bonds was last at 2.8075%, down from Monday's close of 2.8175%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.97% to 3,281.47, while the CSI300 index fell 0.94% to 4,313.62. The Hong Kong's Hang Seng Index tumbled 1.32% to 20,844.74.

FROM THE PRESS: The continued recovery of new loans and aggregate financing in June indicate improved financing demand of companies and residents, as both figures hit record highs for the same period, China Securities Journal reported citing analysts. June new loans rose CNY2.81 trillion, adding CNY686.7 billion from a year earlier, supported by the rebound of medium- and long-term credit as business confidence picks up and home sales recover, the newspaper said citing analysts. Aggregate financing rose CNY5.17 trillion in June, CNY1.47 trillion more than the same period last year, driven by the large-scale issuance of local government bonds, increased loans to the real economy and off-balance sheet bill financing, the newspaper said citing analysts.

The benchmark Loan Prime Rate may remain unchanged in July, as the central bank is unlikely to lower the rate of Medium-term Lending Facility, an anchor of the LPR, with the economy entering a period of recovery, the Securities Daily reported. The current financing environment remains loose with actual loan interest rates at a low level, while credit demand is also recovering, the newspaper said citing analysts. Though there is a possibility of further lowering LPR in the second half of the year, especially for the five-year and above maturity, which is dependent on the pace of economic recovery in H2, the newspaper said citing analysts. LPR is released on the 20th of every month.

Large state-owned banks are required to tilt resources to manufacturing enterprises and promote the continued rapid growth of medium and long-term loans to the manufacturing industry, Securities Times reported citing a document by the China Banking and Insurance Regulatory Commission released on Monday. For key automobile and home appliance manufacturers, it is necessary to optimise the foreign trade financial services to support their overseas expansion, the newspaper said. For manufacturers with good credit but temporarily in distress due to the pandemic, banks should avoid blindly withdrawing or suspending loans, the Daily said.