MNI China Daily Summary: Friday, January 23

EXCLUSIVE: China will push more high-tech listings and fast-track on-exchange mergers and restructurings in 2026 to lift the quality of listed companies, while keeping new main-board IPO numbers steady, with state capital continuing to trade ETFs to temper market swings, policy advisors told MNI.

EXCLUSIVE: China needs to prepare for rising trade frictions with the European Union, as the EU’s recent dispute with the U.S. over Greenland is unlikely to provide Beijing much opportunity to draw the bloc away from its derisking strategy, Chinese advisers told MNI.

POLICY: The People's Bank of China set the yuan fixing price below 7.0 against the U.S. dollar at 6.9929, 90 pips stronger than the previous 7.0019, hitting a high not seen since May 2023, according to the central bank's website.

LIQUIDITY: The PBOC conducted CNY125 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY38.3 billion after offsetting maturities of CNY86.7 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4935% from 1.5074%, Wind Information showed. The overnight repo average decreased to 1.3983% from 1.4171%.

YUAN: The currency weakened to 6.9642 against the dollar from the previous 6.9628. The PBOC set the dollar-yuan central parity rate lower at 6.9929, compared with 7.0019 set on Thursday. The fixing was estimated at 6.9503 by a Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8225%, down from the previous close of 1.8350%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 0.33% to 4,136.16, while the CSI300 index decreased 0.45% to 4,702.50. The Hang Seng Index rallied 0.45% to 26,749.51.

FROM THE PRESS: The PBOC is unlikely to cut the reserve requirement ratio to address seasonal liquidity demand before the Spring Festival, after it introduced a series of structural measures, Securities Daily reported, citing Wang Qing, analyst with Golden Credit Rating. The PBOC’s rollover of maturing Medium-term Lending Facility operations and excess outright reverse repos has resulted in a net injection of CNY 1 trillion in medium-term liquidity so far in January. Thus, the pace of short-term liquidity injections is likely to be more moderate, though there remains room for interest rate and reserve requirement ratio cuts within the year, the newspaper said citing analysts.

The PBOC will continue to maintain stable operation of the financial market and support stable development of the capital market, said PBOC Governor Pan Gongsheng in an interview with Xinhua. The central bank will manage expectations effectively and keep the yuan stable at a reasonable and balanced level, while strengthening supervision of the bond, foreign exchange, money, bill and gold markets, said Pan. The Bank will also establish a mechanism for providing liquidity to non-bank institutions under specific circumstances, Pan added.

China will provide consumption vouchers for elderly care services to seniors with moderate or severe disabilities around the nation, Yicai reported citing a statement by the Ministry of Finance and one other department. Eligible seniors can apply for a monthly subsidy of up to CNY800 for services including rehabilitation nursing and day care, to be distributed in the form of electronic vouchers.