MNI China Daily Summary: Wednesday, April 12

EXCLUSIVE: Global banking turmoil has rattled China’s investors. While the country’s banking system seems to have escaped unscathed, the wipeout of Credit Suisse’s hybrid bonds has forced investors – many lenders themselves – to review their domestic allocations to subordinated debt and enhance their liquidity management.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY7 billion via 7-day reverse repos, with the rates unchanged at 2.00%. The operation has led to a net injection of CNY7 billion as no reverse repos manuring today, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.9881% from 1.9845%, Wind Information showed. The overnight repo average decreased to 1.3624% from the previous 1.4214%.

YUAN: The currency strengthened to 6.8832 against the dollar from 6.8847 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 6.8854, compared with 6.8882 set on Tuesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.8400%, down from Tuesday's close of 2.8500%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.41% to 3,327.18 while the CSI300 index decreased 0.07% to 4,097.29. The Hang Seng Index fell 0.86% to 20,309.86.

FROM THE PRESS: Multiple child families in the Fangshan district of Beijing could have property purchase restrictions relaxed, as the local government looks to implement a “one district, one policy” approach, according to proposals submitted by the Beijing Municipal Commission of Housing and Urban-Rural Development. The proposals include lowering the down payment ratio on second homes and increasing the number of houses that can be purchased, according to experts interviewed by 21st Century Herald. Authorities could implement these policies nationwide to other tier one cities, which would increase housing demand and property prices, if approved by the People’s Bank of China, according to the Herald.

Low food prices were responsible for the weaker than expected CPI rate in March, according to the Securities Daily. Overall food prices fell 1.4% m/m, as better than expected weather lowered appetites and pork prices fell 4.2%. According to experts, the high inventory levels of live pigs and a decline in demand following the Spring Festival kept pork prices low and more policy support was needed to boost demand, according to the paper.

Authorities will likely not cut China's LPR due to satisfactory Q1 GDP and credit growth, and subdued CPI, according to Yicai. Experts said the central bank has room to support the economy if needed, but will be more inclined to cut the reserve rate requirement (RRR) or increase its targeted lending, rather than launching a policy cut when rates are at historic lows due to concerns about financial risk. Another analyst said authorities have already implemented loose monetary policy and the focus should shift to boosting private sector confidence by improving market access, promoting fair competition and protecting property rights.