MNI China Daily Summary: Wednesday, March 13

     TOP NEWS: The annual growth of loans for private and small companies should

not be lower than the growth of other types of loans, China Banking and

Insurance Regulatory Commission said, as it raised the lending goal Wednesday.

Banks have been told to lend to more small and micro-sized enterprises(SMEs)

than in the same period last year. 

     Also, banks and financial institutions are required to strengthen the

monitoring of the use of loans for private SMEs, making sure the funds will not

flow into local government financing platforms and the real estate sector to

form new risks, CBIRC said.

     POLICY: China infrastructure investment will pick up modestly from the low

levels seen in 2018, boosted by increased issuance of local government special

bonds, one senior government advisor told MNI Wednesday, although another

advisor believes planned issuance this year is not enough to support the needed

investment. Investment will grow at a quicker pace than the 3.8% seen last year,

but far slower than the 19% witnessed in 2017, said Bai Chong-en, Dean of the

School of Economics and Management at Tsinghua University, as infrastructure

projects are ramped up as part of the plans to boost the economy.

     LIQUIDITY: The PBOC skipped open market operations for the tenth straight

trading day, leaving liquidity unchanged as no reverse repos mature, according

to Wind Information. The total liquidity in the banking system is at a

reasonable and ample level, said the PBOC.

     RATE: The 7-day weighted average interbank repo average rate for depository

institutions (DR007) decreased to 2.4000% from Tuesday's close of 2.5827%, Wind

Information showed. The overnight repo average decreased to 2.0800% from

Tuesday's 2.3589%.

     YUAN: Dollar-yuan slipped to 6.7092 against the U.S. dollar from Tuesday's

close of 6.7114. The PBOC set the dollar-yuan central parity rate stronger at

6.7114 today, compared with 6.7128 set on Tuesday.

     BONDS: The yield on the benchmark 10-year China Government Bond was last at

3.165%, up 0.5 bps from the close of Tuesday, according to brokers.

     STOCKS: The benchmark Shanghai Composite Index fell 1.09% to 3,026.95. Hong

Kong's Hang Seng Index fell 0.39% to 28,807.45.

     FROM THE PRESS: It is reported that regulators have relaxed the conditions

for local government financing vehicles (LGFVs) to issue corporate bonds.

Previously, LGFVs were not allowed to issue bonds in Shanghai and Shenzhen Stock

Exchanges if over 50% of its operating income in three years came from the local

governments. The 50% ceiling has been removed for LGFVs which aim to issue new

bonds to cover the old debts matured in six months, 21st Century Business Herald

reported today citing an anonymous source. By end-2018, the balance of LGFV

bonds was about CNY6.9 trillion, and about CNY1.4 trillion will mature in 2019,

the newspaper said citing data by Dongfang Jincheng, a credit rating agency.

     China's credit supply is going to be looser as banks obtain more funding

injections to beef up their ability to support the real economy, the China

Securities Journal commented today. The Agricultural Bank of China is slated to

sell CNY 60 billion second-class capital bonds on March 15, joining a slew of

other banks selling bonds to replenish capital, the newspaper said. While

lending figures last month were weaker than in January, banks' liquidity remains

abundant, the newspaper said. As policymakers step up measures to improve the

transmission from loose liquidity towards loose credit, February's fallback from

January shouldn't warrant pessimism, the newspaper said.

     Sales of convertible bonds in the first quarter reached CNY86.5 billion

YTD, more than the total for last year, or four times IPO proceedings, driven by

the prospect of a bullish A-share market, the Securities Daily reported. Many

companies chose to use convertible bonds to replenish capital after they obtain

listings, it said.

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

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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