MNI China Daily Summary: Friday, Aug 30

MNI (MNI (BEIJING)) - LIQUIDITY: The PBOC conducted CNY30.1 billion via 7-day reverse repos, with the rate unchanged at 1.70%. The operation led to a net drain of CNY349.2 billion after offsetting maturities of CNY379.3 billion, according to Wind Information.

PBOC: The People’s Bank of China announced Friday it had bought a net of CNY100 billion of treasuries in August, indicating it has started using China Government Bonds (CGBs) as a regular monetary policy tool.  According to a statement on the PBOCs’ website, it conducted open market operations involving the buying and selling of government bonds in August, purchasing short-term CGB and selling long-term ones to certain primary dealers in the open market.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.6997% from 1.6310%, Wind Information showed. The overnight repo average increased to 1.5322% from 1.5136%.

YUAN: The currency strengthened to 7.0881 against the dollar from 7.1102 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.1124, compared with 7.1299 set on Thursday.

BONDS: The yield on 10-year China Government Bonds was last at 2.1125%, down from 2.1175% at Thursday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.68% to 2,842.21 while the CSI300 index increased 1.33% to 3,321.43. The Hang Seng Index rose 1.14% to 17,989.07.

FROM THE PRESS: 

The People’s Bank of China will maintain a supportive monetary policy stance, strengthen countercyclical adjustments and increase financial support for the real economy, said PBOC Governor Pan Gongsheng at an expert consulting meeting, according to a statement on its website. The central bank will also increase policy reserves, strengthen macro-policy coordination, and support the consolidation of the economic rebound, Pan added.

Authorities must consider expanding the budget deficit and issue more treasury bonds in H2 to address falling land-sale revenue, according to Luo Zhiheng, chief economist at Yuekai Securities. The government can improve the efficiency of additional funds by supporting consumption and the construction of central government large infrastructure projects, said Zhang Jun, chief economist at China Galaxy Securities. The national broad fiscal expenditure exceeded revenue by about CNY3.8 trillion during the first seven months, official data recently showed. (Source: Yicai)

The total amount of social logistics increased by 5.3% y/y in July, a rise of 0.1 percentage points month-on-month, reversing the downward trend since April, Securities Daily reported citing data by China Logistics Information Center. The equipment updating in coal, petrochemical, electricity amid the policy push drove up logistics demand, the newspaper said, citing Meng Yuan, deputy director of logistics statistics at the CLIC. Retail sales offline have rebounded, with the total retail trade logistics volume increasing by 2.7% y/y, up 1.2 percentage points from June, Meng added.