MNI China Daily Summary: Tuesday, June 8

LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.2% on Tuesday. The operation left liquidity unchanged given it netted off CNY10 billion reverse repos maturing today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 2.2684% from Monday's close of 2.2790%, Wind Information showed. The overnight repo average fell to 2.1872% from 2.3092% on Monday.

YUAN: The currency weakened to 6.3972 against the dollar from Monday's close of 6.3961. The PBOC set the dollar-yuan central parity rate lower for a second day at 6.3909, compared with the 6.3963 set on Monday.

BONDS: The yield on 10-year China Government Bonds was last at 3.1375%, down from Monday's close of 3.1400%, according to Wind Information.

STOCKS: The Shanghai Composite Index fell 0.54% to 3,580.11, while the CSI300 index lost 0.86% to 5,232.12. The Hong Kong's Hang Seng Index edged down 0.02% to 28,781.38.

FROM THE PRESS: The PBOC may increase liquidity injection to offset a possible gap resulting from government bond issuances, companies buying forex for paying dividends and quarter-end regulatory compliances, the China Securities Journal reported citing analysts. The planned issuance of China Government Bonds and local government bonds this week exceeded CNY470 billion, a record high this year, while Chinese companies listed overseas will be in peak season for paying dividends, the newspaper said citing Xie Yaxuan, the chief analyst at China Merchants Securities. The PBOC may release more reverse repos or roll over the maturing MLFs with excess added, the newspaper said citing Song Xuetao, chief analyst of Tianfeng Securities.

China's surging imports and exports last month showed the laws of economics are stronger than the will of U.S. politicians who advocate decoupling, and that its manufacturing cannot be suppressed by increasing tariffs, the Global Times said in an editorial. Exports to the U.S. rose 38.9% in the first five months while trade with India expanded by 70%, despite strained political relations, the newspaper said. China has become the most stable global production center as other capacities and commodities became more volatile, the newspaper said. If countries weaken cooperation with China for political purposes, they will only give away opportunities to others and incur more losses, the newspaper said.

China's foreign exchange reserves stood at USD3.2218 trillion by the end of May, an increase of 0.74% from the previous month, driven by the recent appreciation of non-U.S. currencies, the rise in major financial assets prices and the rapid growth in exports, the Economic Information Daily reported citing the State Administration of Foreign Exchange. Looking forward, the country's forex supply and demand will be balanced as the yuan fluctuates, while the continued recovery supports the stability of forex reserves, the daily said citing Wen Bin, chief researcher of China Minsheng Bank.