MNI China Press Digest, June 2:Liquidity, Yuan, Capital Market

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

on Tuesday:

     Cutting the reserve requirement ratio (RRR) is not the preferred tool for

the PBOC to add liquidity, given that RRR reduction may send a strong easing

signal, China Securities Journal said in a front-page report today. The report,

which dampened market expectations of an RRR cut to fill the liquidity gap in

June, said the PBOC was more likely to inject liquidity through reverse repos

and medium-term lending facilities.

     The Chinese yuan tends to stabilize at 6.9 against the U.S. dollar and may

not depreciate below the key psychological level of seven in the near term,

according to a report published by Ming Ming, chief analyst at CITIC Securities.

When China's Real Effective Exchange Rate (REER) Index falls by one point,

China's accumulative export growth will increase by 0.36% y/y and exports to the

U.S. will grow by 9.07% y/y, the report said.

     China's capital market is becoming more resilient as it is well supported

by market reforms, Securities Daily said in a front-page commentary today. The

newspaper also cited improving market infrastructures and a momentum for market

opening as reasons for the resilience. A historically low market valuation also

provided the environment for the capital market to resist risks, the newspaper

said.

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

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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