MNI China Press Digest August 02: SAFE, Bonds, Delisting

Highlights from Chinese press reports on Wednesday:

• China will implement policies to maintain basic stability in the yuan exchange rate at a reasonable and balanced level, according to the State Administration of Foreign Exchange (SAFE). At a recent work conference held with the People’s Bank of China, leaders said authorities will implement prudent monetary policy accurately and strengthen counter-cyclical adjustments. The central bank will use various tools to ensure reasonable and sufficient liquidity and promote the steady and moderate decline of financing costs for firms and households. Policymakers will use aggregate and structural monetary-policy tools, and support innovation, green development and SMEs.
• Authorities will require local governments to issue all CNY3.8 trillion of special bonds set for this year before the end of September and use them before the end of October, according to unnamed sources at local finance departments and local bond underwriters. This means the average monthly issuance scale in August and September will reach CNY670 billion, as local governments hold CNY1.34 trillion in their remaining quota after a total of CNY2.36 trillion were sold for project construction so far this year. About CNY100 billion is reserved for small and medium-sized banks, which has not been subjected to the issuance time limit in the past. (Source: 21st Century Business Herald)
• China should continue to improve the delisting mechanism to improve the quality of listed companies and reduce medium and long-term investor concerns, according to an editorial piece by 21st Century Business Herald. Domestic institutional investors such as public funds, social security funds and insurance funds hold about 20% of A-share market value, compared to a proportion of 40-50% in the U.S. stock market. A market dominated by retail investors is prone to fluctuations and authorities should also appropriately relax the market entry threshold for personal pensions and housing provident funds to allocate to A-shares, the newspaper said.