MNI China Daily Summary: Wednesday, July 8

     LIQUIDITY: The People's Bank of China (PBOC) skipped open market operations

on Wednesday, leaving liquidity unchanged, according to Wind Information.

Liquidity in the banking system is reasonable and ample, the PBOC said on its

website.

     RATES: The seven-day weighted average interbank repo rate for depository

institutions (DR007) increased to 2.1124% from Tuesday's close of 2.0603%, Wind

Information showed. The overnight repo average rose to 2.0839% from the previous

1.7130%.

     YUAN: The currency strengthened to 7.0176 against the dollar from 7.0241 on

Tuesday. The PBOC set the dollar-yuan central parity rate lower at 7.0207, the

strongest since March 17, compared with the 7.0310 set on Tuesday. 

     BONDS: The yield on 10-year China Government Bond was last at 3.0400 %, up

from the close of 3.0250% on Tuesday, according to Wind Information. 

     STOCKS: The Shanghai Composite Index increased 1.74% to 3,403.44. Hang Seng

Index edged up 0.59% to 26129.18.

     FROM THE PRESS: The Chinese CPI index for June may edge up to 2.6% from

2.4% in May as pork prices fell and oil prices recovered, though market

participants expect the index to fall in H2, Economic Information Daily

reported. CPI will be lower than 1% Y/Y in Q4 due to high pork prices last year

and non-food prices are expected to remain weak, the daily said citing Li Chao,

the chief economist with Zheshang Securities. China will publish CPI index on

Thursday.

     The yuan will trade at around 7 against the U.S. dollar in H2 as the

Chinese economy continues to recover and foreign capital regains confidence in

Hong Kong, the Securities Daily said citing Wang Xin, a researcher with the

Research Institute of the Bank of China. The yuan is also helped by the Chinese

economy, which posted marginally improved indicators and a stable monetary

policy that maintains the interest spread between China and the U.S, the

newspaper said. 

     Beijing reported no new Covid-19 case for a second day on Tuesday after 335

reported cases in the so-called second wave eased and the city authorities

contained the risky region around the Xinfadi wholesale market, Xinhua News

Agency reported. The city has conducted tests on more than 11 million people,

about half of the city's population, according to Xinhua.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: archie.zhang@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

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