MNI China Daily Summary: Wednesday, Sept 11

MNI (MNI (BEIJING)) - POLICY: Beijing risks losing the confidence of European firms operating in China unless more is done to boost domestic demand and address market access, Jens Eskelund, president of the European Union Chamber of Commerce in China, told reporters.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY210 billion via 7-day reverse repos, with the rate unchanged at 1.70%. The operation led to a net injection of CNY209.3 billion after offsetting maturities of CNY0.7 billion, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.8106% from 1.8612%, Wind Information showed. The overnight repo average decreased to 1.7811% from 1.9409%.

YUAN: The currency strengthened to 7.1131 against the dollar from 7.1235 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 7.1182, compared with 7.1136 set on Tuesday. 

BONDS: The yield on 10-year China Government Bonds was last at 2.0050%, down from 2.0200% at Tuesday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.82% to 2,721.80 while the CSI300 index decreased 0.30% to 3,186.13. The Hang Seng Index fell 0.73% to 17,108.71.

FROM THE PRESS: 

The mooted cut to existing mortgage interest rates will be constrained by banks’ narrowing interest margin and any reduction would be limited, Shanghai Securities News reported citing analysts. The current mortgage interest rate is 3.4% for first-time buyers in Shanghai, compared with the 4.55% level of existing loans. Mortgagees feel greater pressure this year amid weakened income growth and asset value, while some banks have allowed those under great payment pressure to make interest-only repayments within a certain period, the newspaper said.

China’s electric vehicle production and consumption grew by about 30% y/y in August to reach over one million units, as local governments’ trade-in subsidies have stimulated demand for new cars, Securities Daily reported. EV sales accounted for about 45% of total new car sales. The total automobile production and sales both exceeded 2.4 million units in August, growing 9% and 8.5% m/m respectively. The sales boom is expected to continue amid the upcoming September-October peak season, along with new product launches by major automakers, the newspaper said citing Chen Shihua, deputy secretary-general at the China Association of Automobile Manufacturers.

China’s SME Development Index reached 88.8 points in August, down 0.1 points from July, according to the Association of Small and Medium-sized Enterprises. Ma Bin, vice president at the association, said heavy rainfall and high temperatures, as well as lower economic activity, impacted SMEs. Wu Dan, a researcher at Bank of China, said the results showed economic development was undergoing transformation, but noted indices for accommodation, catering and retail industries had increased. (Source: Securities Daily)