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EGB Supply for W/C Jul 26


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What a Short, Strange Trip It's Been


Pfizer, Moderna Jabs Retain High Trust; AZ, Sputnik Lower

     EXCLUSIVE: U.S. criminal charges against Huawei Technologies and its CFO
will probably sour the atmosphere but not derail trade talks between Beijing and
Washington this week, Chinese trade advisors told MNI, although they noted that
progress in the negotiations is likely only to be partial. The charges filed on
Monday by the U.S. Justice Department against China's second-largest smartphone
supplier and its CFO Meng Wanzhou, indicated U.S. "unfriendliness", according to
Liu Hong, a director of the Ministry of Commerce's China Association of
International Trade. But they should not prevent some progress in the talks,
which come as a 90-day negotiation period agreed by presidents Xi Jinping and
Donald Trump approaches its final month, he said. "There should be advances in
intellectual property protection, forced technology transfers, and reforms of
state-owned enterprises," Liu told MNI. "But they will be limited."
     POLICY: The PBOC isn't pursuing a version of quantitative easing, a
government researcher told MNI Tuesday. "There is no need for QE; we still have
many options," such as further cutting reserve ratios or even rates, Sun
Xuegong, director of the Institute of Economic Research under the National
Development and Reform Commission, said on the sidelines of a Beijing press
     LIQUIDITY: The PBOC maintained ample cash in the interbank market through
January, ensuring there was no shortages in the run up to the Chinese New Year
celebrations. The January MNI China Liquidity Survey saw the percentage of
traders seeing liquidity conditions as improved on the previous month rising to
68.8%, up from zero in the previous survey.
     LIQUIDITY: The PBOC injected CNY50 billion into the market via 14-day
reverse repos. It resulted in a net injection of CNY50 billion, with no reverse
repo maturing today, according to Wind Information. The PBOC said today's OMO is
to maintain overall liquidity in the banking system at a reasonable and ample
     RATE: The 7-day weighted average interbank repo average rate for depository
institutions (DR007) decreased to 2.7468% from Tuesday's close of 2.7709%, Wind
Information showed. The overnight repo average decreased to 1.9762% from
Tuesday's 2.0571%.
     YUAN: The yuan appreciated to 6.7131 against the U.S. dollar from Tuesday's
close of 6.7309. The PBOC set the yuan's central parity rate against the dollar
at 6.7343 on Wednesday, compared to the 6.7356 set on Tuesday.
     BONDS: The yield on the benchmark 10-year China Government Bond was last at
3.1250%, down from the closing of 3.1400% on Tuesday, according to Wind
     STOCKS: The benchmark Shanghai Composite Index closed down 0.72% at
2,575.58. Hong Kong's Hang Seng Index increased 0.40% to 27,642.85.
     FROM THE PRESS: China central bank's move to set up the Central Bank Bill
Swap (CBS) tool allows banks to issue perpetual bonds to replenish capitals, but
the PBOC won't directly increase the base money supply via the tool, nor will it
bear the credit risk of perpetual bonds for banks, said China Business News
today citing Sheng Songcheng, former director of the Survey and Statistics
Department at the PBOC. The move isn't a quantitative easing as the short-end
interest rate is still as high as 2.5%, and the PBOC has a variety of tools to
use, the paper said citing Sheng.
     Success of the new perpetual bonds for banks will depend largely on whether
the pricing mechanism remains market based, as different institutional investors
have different capital costs and return requirements, China Securities Journal
said citing analysts. Insurance firms, pension funds and other long-term funds
may become the main investors in these newly issued perpetual bonds, the
newspaper said.
     Local governments are likely to be given greater freedom in formulating
policies to promote foreign investment, albeit within statutory limits,
according to the latest draft foreign investment law currently reviewed by the
Standing Committee of the National People's Congress, the Beijing News reported
today. Pushing policies aimed at stimulating investment is not enough, the
newspaper said citing Du Liming, member of the NPC Standing Committee, and local
authorities should also be given the right to simplify the administrative
process to facilitate greater investment.
     Huawei must never cede to Washington pressure, as it is hard for the U.S.
to exclude the company from the telecom industry or the construction of a 5G
network, as Huawei is an industry leader with many licensing deals with major
American firms already in place, the Global Times said late Tuesday in an
editorial. The paper said "Washington is playing political tricks under a legal
pretext" and questioned why the U.S. commerce secretary, FBI director, homeland
security secretary and other senior officials attended a press conference when
the U.S. justice department announced charges against Huawei.
--MNI Beijing Bureau; +86 (10) 8532-5998; email:
--MNI Beijing Bureau; +86 10 8532 5998; email:
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]