MNI China Daily Summary: Tuesday, March 19

POLICY: China’s reference lending rate will likely remain unchanged in March as the central bank focuses on pushing lenders to implement previous easing measures via lower real loan rates and channelling ample liquidity through the economy. The Loan Prime Rate, based on the People’s Bank of China (PBOC)’s medium-term lending facility (MLF) rate and quotes submitted by 20 banks, will hold at 3.45% for the one-year maturity and 3.95% for the over-five-year tenor on Wednesday.

LIQUIDITY: The PBOC conducted CNY5 billion via 7-day reverse repo on Tuesday, with the rates unchanged at 1.80%. The operation has led to a net drain of CNY5 billion after offsetting CNY10 billion maturity today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8867% from 1.8789%, Wind Information showed. The overnight repo average increased to 1.7574% from the previous 1.7509%.

YUAN: The currency weakened to 7.1993 against 7.1982 at Monday's close. The PBOC set the dollar-yuan central parity rate higher at 7.0985, compared with 7.0943 set on Monday. The fixing was estimated at 7.2020 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.2871%, down from Monday's close of 2.3050%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.72% to 3,062.76 while the CSI300 index fell 0.72% to 3,577.63. The Hang Seng Index tumbled 1.24% to 16,529.48.

FROM THE PRESS: Stricter control over the quality of applications for companies planning to list will become the new normal, China Securities Journal reported. As of March 18, 67 companies have terminated their IPO applications amid tightening regulations, more than the 43 terminations over the same period last year. The pace has fallen significantly with only 24 companies achieving initial listings to raise a total CNY20.4 billion, down from the previous 56 companies raising CNY47.5 billion.

Official data from January and February shows no improvement in real-estate sector fundamentals which may need longer to stabilise according to Ming Ming, chief economist at CITIC Securities. However he expects China’s exports to continue the year's solid start and maintain single-digit growth for 2024. Data results so far point to the economy growing by 5.5% in Q1, said Luo Zhiheng, chief economist at Guangdong Securities. (Source: 21st Century Business Herald)

China has tightened regulation in the consumer-loan sector aimed at strengthening customer rights and interests and promoting high-quality development of the industry, according to the National Financial Regulatory Administration (NFRA). Under new rules, major investors in a consumer finance company must have a minimum CNY1 billion of registered capital. Financial institutions that want to become major investors must have a minimum CNY500 billion in total assets. Authorities have raised the shareholding ratio requirement for major investors from no less than 30% to no less than 50%. (Source: NFRA website)