MNI China Press Digest, April 2: RRR Cut, Yuan, Housing

     BEIJING (MNI) - The following lists highlights from China press reports on

Tuesday:

     The PBOC should hold the decision to cut reserve requirement ratio until

the first-quarter economic data is known as well as considering the liquidity

condition and interest rates, the Economic Information Daily said today citing

Sheng Songcheng, a former advisor to the central bank, who responded to

speculation that RRRs may be cut this month. Cutting RRRs when the economy is

still stabilizing may risk inflation and cause excess liquidity to speculate on

real estate, the newspaper said citing Sheng. China is scheduled to release Q1

data on April 17, according to the National Bureau of Statistics.

     The yuan is likely to strengthen to as high as 6.6 against the U.S. dollar

from about 6.7 now as China's trade relations with the U.S. improve, said Ming

Ming, chief analyst at CITIC Securities in a report. A halt in the reverse U.S.

bond yield curve, often seen as a recession signal, coupled with strong consumer

confidence and positive new housing sales data showed a U.S. recession is less

likely for now, further reducing external pressure, Ming said. A stronger yuan

also tend to boost China's stock market, he said. The yuan traded 6.7196 against

the dollar at 10:34 a.m. local time.

     March sales volume of second-hand housing in Beijing hit a one-year high at

16,051 units, leading the recovery of housing markets in first- and second-tier

cities, said Securities Daily today. The sharp rise of transaction was driven by

market speculation that the loan policy for second housing could be further

tightened, as well as more mortgage loan approvals, said the newspaper citing

Zhang Bo, chief analyst at 58 Anjuke Institute. Suppressed demand and

speculation also fueled the market, the daily reported citing Zhang Dawei, chief

analyst at Centaline Property.

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

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