MNI China Daily Summary: Wednesday, June 26

EXCLUSIVE: The MNI China Economy Condition Index hit its lowest level since August last year in June, with 30.2% of traders noting a deterioration in the economy versus 16.7% last month, the MNI China Liquidity Index has shown.

EXCLUSIVE: Cost competitiveness and strong global demand will continue to drive growth among China’s green-technology exports, while trade tensions will accelerate the sector’s continued globalisation, a Chinese industrial policy advisor has told MNI.

EXCLUSIVE: Beijing’s reliance on German-made equipment will lower trade friction with Berlin, a leading trade delegate has told MNI, noting China’s improved H2 economic outlook had driven increased optimism among member firms.

LIQUIDITY: The PBOC conducted CNY250 billion via 7-day reverse repo on Wednesday, with the rates unchanged at 1.80%. The operation has led to a net drain of CNY28 after offsetting the CNY278 billion maturity today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.1333% from 2.0460%, Wind Information showed. The overnight repo average increased to 1.9702% from 1.9630%.

YUAN: The currency weakened to 7.2666 to the dollar from 7.2628 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 7.1248, compared with 7.1225 set on Tuesday.

BONDS: The yield on 10-year China Government Bonds was last at 2.2250%, down from Tuesday's close of 2.2350, according to Wind Information.

STOCKS: The Shanghai Composite Index increased 0.76% to 2,972.53 while the CSI300 index rose 0.65% to 3,480.26. The Hang Seng Index increased 0.09% at 18,089.93.

FROM THE PRESS:

Officials will accelerate trade-in schemes for old products after China recycled 55.6% more cars in May year-on-year, according to Xu Xingfeng, director at the Ministry of Commerce's Consumer Promotion Department. So far, local governments have arranged about CNY9 billion to support automobile trade-ins, while the Ministry of Finance has issued CNY6.44 billion. From January to May, major e-commerce platforms increased trade-in sales of home appliances by 81.8% y/y. (Source: 21st Century Business Herald)

Local-government bond issuance will peak in Q3 with over CNY2 trillion deals planned to be issued, which will greatly support infrastructure investment, China Securities Journal reported. A total of CNY2.36 trillion bonds are planned to be issued by 27 regions, with Sichuan, Guangdong, and Hunan provinces all exceeding CNY100 billion, the newspaper said. National Development and Reform Commission said it has finished the screening of 2024 local special-bond projects, which means physical workload will be form at a faster pace and infrastructure investment will keep stabilising the economy, said Feng Ling, head of research at Golden Credit Rating.

Local governments have made phased progress in resolving implicit debts, but illegal borrowing has not been completely curbed, Caixin reported citing a report by the National Audit Office. Some regions with high debt levels still relied on high-interest, non-standard borrowing, or overseas bonds to sustain payment of previous non-standard private placement bonds issued by local-government financing vehicles, Caixin said. The audit report also disclosed for the first time that state-owned enterprises in 24 regions raised more than CNY11.2 billion implicit debts by illegally issuing financial products on local financial asset exchanges or public fund-raising.