MNI China Daily Summary: Wednesday, September 22

POLICY: China Evergrande Group's main unit promises to make a bond interest payment due Thursday, easing some market concerns about a possible default by the country's second-largest and most indebted developer.

LPR: China's central bank on Wednesday left its benchmark rate for loans unchanged for the 17th straight month, according to a statement on the People's Bank of China website. The Loan Prime Rate, guiding companies' cost of borrowing, remains at 3.85% for the one-year maturity and 4.65% for five years.

LIQUIDITY: The PBOC injected CNY60 billion via 7-day reverse repos and another CNY60 billion via 14-day reverse repos with the rate unchanged at 2.2% and 2.35%, respectively. The operations lead to a net injection of CNY90 billion after offsetting the maturity of CNY30 billion reverse repos today, according to Wind Information. The operation aims to keep liquidity stable by the end of the quarter, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 2.2328% from the close of 2.2482% on Sep. 18, Wind Information showed. The overnight repo average rose to 2.1505% from the previous 2.1035%.

YUAN: The currency weakened to 6.4683 against the dollar from 6.4521 before the three-day holiday. The PBOC set the dollar-yuan central parity rate higher at 6.4693, compared with the 6.4527 set before the holiday.

BONDS: The yield on the 10-year China Government Bond was last at 2.8600%, down from Saturday's close of 2.8700%, according to Wind Information.

STOCKS: The Shanghai Composite Index rose 0.40% at 3,628.49, while the CSI300 index fell 0.70% to 4,821.77. Hang Seng Index gained 0.51% to 24,221.54.

FROM THE PRESS: The PBOC will steadily promote yuan internationalization, further expand the cross-border use of yuan under current accounts in businesses such as commodity and e-commerce trade, according to the 2021 RMB Internationalization Report published on the PBOC website. The central bank said it will further broaden cross-border investment and financing channels for the yuan, enrich risk hedging tools, while strengthening the monitoring and early warning of cross-border capital flows. As of end-June, foreign investors hold a total CNY10.26 trillion of financial assets including yuan stocks, bonds, loans and deposits, rising 42.8% y/y. Yuan ranks the fifth among major international payment currencies in June, also the fifth in the official foreign exchange reserve currency composition (COFER) tracked by the International Monetary Fund (IMF).

China's consumption may rebound from the low level in August as policies to boost consumer demand kick in, the Securities Times said. During the Mid-Autumn Festival, travelers made about 88 million trips inside China, generating CNY37 billion in total tourist revenue, or 87.2% and 78.6% of the pre-pandemic levels in 2019, the newspaper said citing data by the Ministry of Culture and Tourism. The government has released measures to promote spending on new and second-hand vehicles, home appliances, furniture and catering following the sluggish August retail sales data, which would help to unleash more demand in the upcoming consumption peak season in September and October, the newspaper said citing analysts. China's retail sales managed to gain only 2.5% y/y in August, the slowest in a year, down from July's 8.5%.

China should optimize controls over the real estate market and not hurt those in real demand for housing, the Economic Daily said in a commentary. There are still new residents and young people in large cities with strong desires to purchase homes though without sufficient money, the newspaper said. Their needs should be assured and met to help enlarge the market and ensure its healthy growth, said the newspaper. Those who speculate on houses have the capital and resources to evade policies while the less resourceful but with real needs often fall victims, so the government should further refine policies, said the newspaper.