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Free AccessMNI China Daily Summary: Wednesday, July 4
TOP NEWS: China's property market should further cool as the country's
urban renewal projects face tighter financing restrictions, a government
think-tank researcher said in an interview with MNI. These policy changes will
help small- and medium-sized cities to prevent housing prices from rising to too
high a level, said Liu Cheng, director of the investment department of China
City Development Academy(CCDA), to MNI.
TOP NEWS: A combination of verbal intervention from the People's Bank of
China (PBOC) and rumoured physical intervention via Chinese state-owned banks on
Tuesday is serving to underpin a notable recovery in the yuan. USDCNH & USDCNY
now trade over 9 figures off of their recent respective highs, underpinning a
pullback in the USD.
LIQUIDITY: The PBOC injected CNY10 billion via its 7-day reverse repos on
Wednesday, resulting in a net drain of CNY80 billion as a total of CNY90 billion
reverse repos matured today, according to a statement on the PBOC website.
CFETS-ICAP's money-market sentiment index closed at 28 on Wednesday, down from
32 on Tuesday.
MONEY MARKET RATES: Benchmark 7-day deposit repo average fell to 2.5989% on
Wednesday from 2.6430% on Tuesday; Overnight average decreased to 2.1225% from
2.3241% on Thursday: Wind Information.
YUAN: The yuan surged against the U.S. dollar on Wednesday, rising to
6.6045 from Tuesday's 6.6365 closing, despite today's weaker fixing. The PBOC
set the yuan central parity rate at 6.6595, weaker than Thursday's 6.4706.
Today's fixing is the lowest since Aug 23, 2017. Scotiabank believes that "the
PBOC will squeeze front-end yuan funding costs to defend the local currency if
the yuan exchange rate slumps again."
BONDS: The yield on benchmark 10-year China Government Bond was last at
3.5100%, up from the previous close of 3.5000%, according to Wind Information.
STOCKS: Shanghai Composite Index closed 1.00% lower at 2759.13, weighted
down by real estate and the looming tariff deadline this Friday. However, ZTE
shares rose by daily maximum limit after it was allowed to temporarily resume
some business activities as the U.S. considers lifting the 7-year ban. Hong
Kong's Hang Seng Index declined 1.14% to 28220.40.
FROM THE PRESS: The PBOC will propose trading mechanisms for maturing bond
defaults and further promote bond market infrastructure to connect domestic and
foreign bond markets, Xinhua Finance reported, citing Pan Gongsheng, director of
State Administration of Foreign Exchange. Allowing some bonds to default is good
for the long term and healthy development of China's bond market, Pan said
according to Xinhua Finance. Appropriate bond defaults place controls on both
issuers and investors, and the prices of the bonds will reflect the quality of
the bonds, Pan said according to the news service.
China's financial regulators should have a flexible approach to guiding
structural deleveraging, Shanghai Securities News reported citing Ma Jun, a
member of the Monetary Policy Committee of the PBOC. The Financial Stability and
Development Committee (FSDC) should coordinate with different parties to control
the strength and pace of deleveraging and be on guard for secondary risks in the
process, Ma told the newspaper.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: sherry.qin@marketnews.com
--MNI Beijing Bureau; +86-10-8532-5998; email: beijing@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]
To read the full story
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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.