MNI China Daily Summary: Tuesday, May 28

EXCLUSIVE: The U.S. will find it hard to substitute China in the electric vehicle supply chain, a policy advisor told MNI, noting exports will continue to support the Chinese economy this year despite rising trade tension.

BRIEF: China's financial regulator will firmly uphold the bottom line of preventing systemic financial risks and address illegal activities that affect financial stability and disrupt market order, the National Financial Regulatory Administration.

LIQUIDITY: The PBOC conducted CNY2 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The operation has led to no change to the liquidity after offsetting the CNY2 billion maturity today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8969% from 1.8965%, Wind Information showed. The overnight repo average increased to 1.8246% from the previous 1.7804%.

YUAN: The currency weakened to 7.2470 from 7.2446 against the dollar from Monday. The PBOC set the dollar-yuan central parity rate higher at 7.1101, compared with 7.1091 set on Monday.

BONDS: The yield on 10-year China Government Bonds was last at 2.3200% down from 2.3300% at Monday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.46% to 3,109.57 while the CSI300 index fell 0.73% to 3,609.17. The Hang Seng Index was down 0.03% to 18,821.16.

FROM THE PRESS: Shanghai became the first among China’s biggest cities to lower down-payment ratios and the mortgage rate floor for homebuyers on Monday. The down-payment ratios for first- and second-time buyers were lowered to a minimum of 20% and 35%, from the previous 30% and 50%. The minimum mortgage rates for first- and second-time purchases were lowered to 3.5% and 3.9%. The city also allowed families with multiple children to purchase an additional house and lower the income tax, and social security payment requirement for non-local homebuyers. (Source: Securities Daily)

China wants to accelerate China-Japan-ROK Free Trade Agreement negotiations and strengthen cooperation in high-end manufacturing, new energy industries, artificial intelligence, and biomedicine, Premier Li Qiang said at the 9th China-Japan-ROK Leaders Meeting in Seoul. Huang Fei, director at the Seoul Graduate School of Science noted the three nations have huge opportunity for industrial and supply-chain synergy beneath end product competition. Chen Yan, executive director of the Japan Enterprise Research Institute said Japanese firms should be important partners in technological fields, but cooperation remained uncertain. (Source: Yicai)

China set up a national integrated circuit industry investment fund (phase III) on Friday with registered capital totaling CNY344 billion. The six major state-owned banks including Industrial and Commercial Bank of China and Agricultural Bank of China on Monday also pledged to contribute CNY114 billion, with a shareholding ratio of 33.14%. The fund is jointly funded by the Ministry of Finance and 18 other shareholders. The registered capital of the third phase of the fund has increased significantly, exceeding the combined amount of the first and second phases. (Source: China Securities Journal)