MNI Daily Summary: Tuesday, Aug 4

POLICY: China's monetary policy should be more flexible and targeted in the second half of the year, People's Bank of China officials said during a video conference Monday, adding that measures taken to help businesses support employment should be implemented effectively. The PBOC will use multiple monetary policy tools to boost broad money supply growth and the scale of social financing above last year's level, while promoting substantial growth in loans to small companies and manufacturers, a statement outlining the conference posted on its website said.

POLICY: China has approved the initial phase of a rail plan linking Guangdong with Hong Kong and Macau, with near-term investment amounting to CNY474 billion with a 50% capital outlay, a statement on the National Development and Reform Commission website stated Tuesday. With new railway lines totaling 775 kilometres, the initial plan will host 13 intercity rail projects and five transportation hubs, linking airports in Shenzhen and high-speed rail stations in Guangdong, among others, the statement said.

LIQUIDITY: The People's Bank of China (PBOC) skipped its 7-day reverse repos operations on Tuesday, draining a net of CNY80 billion as the same amount of repos matured today, according to Wind Information. The total liquidity in the banking system is at a reasonable and ample level, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 2.1145% from Monday's close of 2.0277%, Wind Information showed. The overnight repo average increased to 1.9106% from 1.5785% on Monday.

YUAN: The currency weakened to 6.9820 against the dollar from Monday's close of 6.9773. PBOC set the dollar-yuan central parity rate lower at 6.9803, compared with Monday's 6.9980.

BONDS: The yield on 10-year China Government Bonds was last at 2.9400%, down from Monday's close of 2.9425%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.11% to 3,3371.69, while the CSI300 index gained 0.09% to 4,775.80. The Hong Kong's Hang Seng Index increased 2% to 24946.63 with technology companies leading the surge.

FROM THE PRESS: The PBOC may refrain from further cuts to banks' RRRs or policy interest rates in H2 as policymakers resort to pressing lenders to reduce profit margins to help reduce financing costs, Yicai.com reported. The report cited Wang Qing, the chief macroeconomy analyst with Golden Orient Rating, who predicted that M2 and total social financing will increase by no more than 12% and 14% respectively as the PBOC scales back monetary easing.

China will not accept the "theft" of a Chinese technology company and it has a number of response options if the Trump administration carries out its planned "smash and grab" of banning TikTok's U.S. operations, the China Daily said in an editorial. The U.S. has effectively invited potential U.S. buyers to participate in an officially sanctioned "steal" of Chinese technology, the newspaper said. Selling its U.S. operations to Microsoft might be preferable for ByteDance, TikTok's parent company in China, as it is working "for the best outcome", the Daily said.

China's Top 100 property developers saw sales revenue increase by an annualised 25.7% in July, the fastest growth this year, according to 21st Century Business Herald. Citing data from CRIC Research, the Herald's report said land sales also accelerated this year as 50 larger cities recorded CNY2.35 trillion in sales in the first seven months, up 17.4% from last year. Home buyers crowded markets in some cities such as Shenzhen, Chengdu and Nanjing with some in Chengdu requiring lotteries.