MNI China Daily Summary: Wednesday, May 8

EXCLUSIVE:China’s trade should recover to pre-pandemic trends of single digit growth in 2024 driven by export demand for new manufactured goods, following flat results last year, a senior policy advisor to the National Development and Reform Commission told MNI.

POLICY: China continues to push its application to join the Digital Economy Partnership (DEPA), attending a meeting to discuss Beijing’s application, according to the Ministry of Commerce.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY2 billion via 7-day reverse repos, with rates unchanged at 1.80%. The operation led to a net injection of CNY2 billion as no repos matured today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8706% from the close of 1.8458% on Tuesday, Wind Information showed. The overnight repo average rose to 1.8389% from 1.7498%.

YUAN: The currency weakened to 7.2261 against the dollar from Tuesday's close of 7.2147. The PBOC set the dollar-yuan central parity rate higher at 7.1016, compared with 7.1002. The fixing was estimated at 7.2159 by Bloomberg survey today.

BONDS: The yield on the 10-year China Government Bond was last at 2.2975%, up from Tuesday's close of 2.2874%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index edged down 0.61% to 3,128.48, while the CSI300 index fell 0.79% to 3,630.22. The Hang Seng Index down 0.90% to 18,313.86.

FROM THE PRESS: Analysts expect the PBOC to cut the reserve requirement ratio in Q2 to release long-term and low-cost funds as authorities may accelerate issuance of government and policy bank bonds, the China Securities Journal reported. Additionally, the PBOC is likely to reduce policy interest rates such as the medium-term lending facility (MLF) rate at an appropriate time, guide banks to lower deposit rates and promote the orderly decline of the benchmark loan prime rate (LPR), the newspaper said, citing Dong Ximiao, chief researcher at Merchants Union Consumer Finance.

China’s Logistic Industry Prosperity Index reached 52.4% in April, up 0.9pp from March, according to the China Federation of Logistics and Purchasing (CFLP). Firms noted an improvement in market foundations, with sub-indices of business volume, new order and equipment utilisation all showing upward trends, according to He Hui, chief economist at the CFLP. Hu Han, an analyst at the China Logistics Information Center, said the economy’s acceleration in production and consumption had driven a rebound in total business volume and new orders. Every sector reported an increase in business activity expectations apart from railway and water transportation firms.

China’s property sector showed 40% lower average daily sales of new housing square meters during this year's May holiday compared with last year, according to China Index Academy. Major cities Shenzhen, Shanghai and Guangzhou saw buyers’ average daily transaction area of new housing square meters decrease by 32%, 62% and 65% respectively. Cao Jingjing, a senior manager at the China Index Academy, said residents prioritised travel during the holiday over the past two years, resulting in a flat market. Guo Yi, chief analyst of Heshuo Institution, noted Beijing’s market would need time to benefit from recent relaxations in purchase restrictions. (Source: 21st Century Business Herald)