MNI China Daily Summary: Monday, July 22

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MNI: PBOC Conducts CNY58.2 Bln Via OMO Mon; 7day Repo Rate Cut

MNI BRIEF: PBOC Cuts 7-Day Repo Rate By 10bp

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PBOC Injects Liquidity For Fourth Session

ASIA RATES
  • INDIA: Yields lower in early trade, bonds moving in tandem with US tsys and boosted a decline in crude oil prices. Yesterday India announced an expansion of support measures for the economy, including an additional 50% in its emergency credit program to INR 4.5tn and widening its scope to the tourism sector alongside healthcare and airlines. While the total package is INR 6.3tn analysis from Deutsche Bank note that most of the measures announced are in the form of credit guarantee schemes and contingent liabilities, which speaks to the limited fiscal headroom available to India. This could weigh on bonds as it implies that India could be forced to increase bond issuance in order to further support the recovery.
  • SOUTH KOREA: Futures rose in South Korea, tracking a move in US tsys. The move higher comes despite an upgrade in growth forecasts by President Moon to 4% from 3.2% previously. There were also reports that a KRW 33tn supplementary budget would be voted on July 2.
  • CHINA: The PBOC injected CNY 20bn into the financial system, the fourth straight day of injections and bringing net additions in the last four sessions to CNY 80bn. Repo rates are higher in early trade, the overnight repo rate up 25 bps at 1.8213% but well below last week's highs above 2.36%. The 7-day repo rate is down 45bps after jumping into the close yesterday. There were reports in the Financial News that the PBOC is likely to continue small liquidity injections via reverse repos heading into month and quarter-end.
  • INDONESIA: Yields higher across the curve. The Straits Times ran a source report suggesting that Indonesia is preparing to implement a "hard lockdown" from tomorrow. The report noted that top officials will hold an internal meeting to discuss the details today. Meanwhile, Central Java, the country's third-biggest province, has tightened Covid-19 restrictions. FinMin Indrawati revealed that the gov't is discussing tax reform plan with lawmakers. Among the proposed changes are a VAT hike (to 12% from 10% on most goods and services) and a new income bracket (35% tax on people with an annual salary above IDR5bn).
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