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Free AccessMNI China Daily Summary: Wednesday, July 19
LIQUIDITY: The People's Bank of China (PBOC) conducted CNY25 billion via 7-day reverse repos with the rates at 1.90%. The operation has led to a net injection of CNY23 billion after offsetting the maturity of CNY2 billion reverse repo today, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.
DATA: China’s export sector will see resilience in H2, despite a drop in external demand impacting wider global trade, according to Li Xingqian, Director-General of the Foreign Trade Department of the Ministry of Commerce. Speaking at a press conference on Wednesday, Li said China remained confident exports would perform well in H2 given China’s competitive advantage and the diversified global market.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.8496% from the close of 1.8912% on Tuesday, Wind Information showed. The overnight repo average rose to 1.6471% from the previous 1.5404%.
YUAN: The currency weakened to 7.2197 against the dollar from 7.1717 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 7.1486, compared with 7.1453 set on Tuesday. The fixing was estimated at 7.1761 by BBG survey today.
BONDS: The yield on the 10-year China Government Bond was last at 2.6900%, up from Tuesday's close of 2.6875%, according to Wind Information.
STOCKS: The Shanghai Composite Index edged up 0.03% at 3,198.84, while the CSI300 index decreased 0.11% to 3,850.87. The Hang Seng Index lost 0.33% to 18,952.31.
FROM THE PRESS: China’s economy will benefit from a consumption rebound in H2 as various policy measures to expand domestic demand and promote consumption take effect, according to Vice Minister of Commerce Sheng Qiuping. Speaking at a recent press conference Sheng noted new trends had emerged in H1 as consumers increased demand for green energy consumption including electric vehicles and home appliances. Sheng said people were now focusing more on their health with sales of organic food and health products increasing rapidly. (Source: Yicai)
Fiscal policy should focus on activating the role of the market, which includes improving preferential tax policies to ease companies’ difficulty in a more targeted manner and supporting private investment to better coordinate with government investment, wrote Yang Zhiyong, director at Finance and Taxation Research Center, Chinese Academy of Social Sciences in a commentary. Using large-scale expansion of government-led investment to maintain the size of the balance sheet does not make much sense and it may also lead to serious inflation and further deterioration of the economy. Aimless investment will only bring about a waste of fiscal funds, Yang said. (Source: 21st Century Business Herald)
More than 60% of listed real-estate companies expect losses in their performance forecasts. Among the 113 listed developers, 67 have released forecasts of which 42 have forecasted a loss in their attributable net profit in H1, while at least half achieved profitability in the same period last year. The most indebted developer, Evergrande Group, has posted losses of CNY800 billion over a two-year period, with CNY686 billion in 2021 and CNY126 billion in 2022, raising the ceiling of losses of Chinese companies to an unprecedented height. (Source: Yicai)
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.