MNI EM China Daily Summary: Tuesday, April 9

POLICY: China passenger vehicles’ export volume set a record in March as the impact of the Red Sea crisis diminishes, the China Passenger Car Association said. The export of passenger vehicles, including complete vehicles and parts for assembly, reached 406,000 units, jumping 39% y/y and 36%m/m, continuing the robust momentum from the end of 2023, said CPCA. Electric vehicles accounted for 29.3% of the total exports, an increase of 5.4 percentage points compared to the same period last year.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY2 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The operation has led to no change to the liquidity after offsetting CNY2 billion maturity today, according to Wind Information.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.8283% from 1.8328%, Wind Information showed. The overnight repo average fell to 1.7176% from 1.7208%.

YUAN: The currency weakened to 7.2338 from 7.2337 at Monday's close. The PBOC set the dollar-yuan central parity rate higher at 7.0956, compared with 7.0947 set on Monday. The fixing was estimated at 7.2262 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.2825%, down from Monday's close of 2.2874%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.05% to 3,048.54 while the CSI300 index fell 0.08% to 3,533.49. The Hang Seng Index gained 0.57% to 16,828.07.

FROM THE PRESS: China remains confident the economy can maintain sustained healthy development despite an uncertain external environment and economic operational problems, according to Li Qiang, premier of China. Speaking at a recent symposium with economists and entrepreneurs, Li said authorities should focus on policy implementation to drive scientific and technological innovation and resolve the issue of weak demand. The government needs to resolve risks in key areas and place people’s livelihood in a prominent position, Li added. (Source: Securities Daily)

China wants to strengthen coordination with all parties over concerns of overcapacity and it will continue to communicate on this with the U.S. at the working group level, said Vice Finance Minister Liao Min on Monday during a media briefing on U.S. Treasury Secretary Yellen’s visit to China. The current production capacities of new energy cars and photovoltaic cells are far from meeting market demand, especially in many developing countries, said Liao. Trade protectionist measures will not help solve the production capacity problem, Liao emphasised. (Source: Ministry of Finance Website)

More than 10 second-, third- and fourth-tier cities have temporarily scrapped the lower limit on mortgage interest rates for first-time homebuyers to stimulate demand, Yicai.com reported. Mortgage interest rates in many cities have dropped to record lows with a level of 3.45% no longer uncommon. However, many industry insiders have called for price control relaxations on new homes, which will help accelerate market adjustment as the sector waits for prices to bottom. New home sales in 20 key cities during the Tomb Sweeping Day holiday last week dropped by about 30%, compared to the same period in 2022.