MNI China Daily Summary: Wednesday, September 4

     DATA: China's service sector continues to be more robust as gauged by

Caixin's China general services PMI index. The index rose to 52.1 in August, the

highest in three months, from 51.6 in July. New orders climbed to four-month

high helped by improved demand and new projects, Caixin said citing companies it

surveyed. New export orders slightly declined, but remained in the expansionary

zone, said Caixin.

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

(OMOs). This resulted in a net drain of CNY60 billion given the same amount of

reverse repos matured, according to Wind Information. The liquidity in the

banking system is relatively high, enough to offset the maturity of reverse

repos, the PBOC said.

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

institutions (DR007) rose to 2.5860% from Tuesday's close of 2.5797%, Wind

Information showed. The overnight repo average fell to 2.4446% from Tuesday's

2.5098%.

     YUAN: Dollar-yuan was last at 7.1538 from Tuesday's close of 7.1785. The

PBOC set the dollar-yuan central parity rate lower for the first trading day in

seven at 7.0878, compared with 7.0884 on Tuesday.

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

3.0425%, down from 3.0650% on Tuesday, according to Wind Information.

     STOCKS: The benchmark Shanghai Composite Index rose 0.93% to 2,957.41. Hong

Kong's Hang Seng Index jumped 3.9% to 26,523.23, the largest daily gain since

Nov 2, 2018, according to Wind Information. The market rallied as media reports

Hong Kong leader Carrie Lam plans to formally withdraw extradition bill.

     FROM THE PRESS: China will allow some of next year's quota of local

government bond issued this year for up to CNY1.85 trillion, including CNY558

billion general bonds and CNY1.29 trillion special bonds, the 21st Century

Business Herald reported late Tuesday. Local authorities are required to submit

the projects to be funded by special bonds, the newspaper said.

     The PBOC is likely to lower the interest rate on the medium-term lending

facility (MLF) in mid-September, pushing down the Loan Prime Rate (LPR) and

lending rates, the China Securities Journal reported. The decision is made

likely as the U.S. Federal Reserve is expected to cut rate this month and

interbank deposit rates being significantly lower than MLF rates, the newspaper

said citing Wang Yifeng, chief banking analyst at Everbright Securities. 

     China is taking measures to stabilize pork production and ensure supplies

to curb soaring prices, the People's Daily Overseas Edition reported. Relevant

departments must calm the market, crack down on illegal hoarding and price hike

collusion, the newspaper said. The weekly average ex-factory price of pork in 16

cities was CNY35.63 per kilogram, up 92.3% y/y and 9.3% m/m, the newspaper

reported citing data by the Ministry of Agriculture.

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

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

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