MNI China Daily Summary: Tuesday, March 17

     EXCLUSIVE: The People's Bank of China (PBOC) will not rush to follow its

major overseas counterparts in cutting rates, a former PBOC official told MNI,

saying coronavirus is now under control in the country and the economy has

started to recover.

     POLICY: China will increase issuance of infrastructure-backed local

government special bonds to help shore up the virus-hit economy, said Liu Shihu,

deputy director of the Investment Division at the National Development and

Reform Commission (NDRC) at a briefing. "China will step up preparations for

infrastructure projects with profitability as well as those in the public

service area," said Liu.

     LIQUIDITY: The PBOC skipped open market operations, leaving liquidity

unchanged, according to Wind Information. Liquidity in the banking system is

reasonable and ample, PBOC said on its website.

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

institutions (DR007) fell to 1.7529% from 1.9456% on Monday, Wind Information

showed. The overnight repo average decreased to 1.0720% from 1.2210%.

     YUAN: The yuan weakened to 7.0096 against the dollar from 6.9974 on Monday.

PBOC set the dollar-yuan central parity rate higher at 7.0094, compared with

Monday's 7.0018.

     BONDS: The yield on 10-year China Government Bonds was last at 2.7150%, up

from the close of 2.6675% on Monday, according to Wind Information.

     STOCKS: The Shanghai Composite Index edged down 0.34% to 2,779.64. Hong

Kong's Hang Seng Index rallied 0.87% to 23,263.73.

     FROM THE PRESS: China's one-year Loan Prime Rate is expected to fall 5bps

to 4% on Friday given to the targeted reserve-deposit ratio cut effective on

Monday, the China Securities Journal reported citing Wen Bin, the chief analyst

with Minsheng Bank. A lower LPR is expected even though the PBOC kept the rate

unchanged for the CNY100 billion in medium-term lending facility yesterday, the

newspaper said.

     The spread of coronavirus in some countries will have a limited impact on

the recovery of the Chinese economy as net exports only account for 1% to 2% of

GDP, the China Securities Journal reported quoting Wang Yupeng, the chief

analyst with Dongxing Securities. Most policies stabilizing the economy will be

announced in Q2, including lowering the deposit benchmark rate and increasing

the deficit-to-GDP ratio, the newspaper said citing Zhu Jianfang, the chief

analyst with Citic Securities.

     China should accelerate the comprehensive resumption of work and production

and restore the normal order of living, prevent cross-border COVID-19 cases -

both incoming and outgoing - and follow up on epidemic controls, according to a

statement from the Central Leading Group for the Coronavirus Epidemic on the

government website. 

--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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