MNI China Daily Summary: Friday, July 1

POLICY: Beijing fully supports Hong Kong in maintaining its unique status as an international financial and trading center, strictly upholding One Country, Two Systems, said President Xi Jinping in a speech to commemorate the 25th anniversary of Hong Kong's return to China on Friday.

DATA: Caixin China's manufacturing PMI for June rose 3.6 points on month to 51.7, rebounding back to the expansion zone above 50 for the first time in four months and hitting the highest level since June 2021, as the resumption of work and production continue to advance following an easing pandemic situation, financial publisher Caixin said.

LIQUIDITY: The People's Bank of China (PBOC) injected CNY10 billion via 7-day reverse repos with the rate unchanged at 2.10%. The operation has led to a net drain of CNY50 billion after offsetting the maturity of CNY60 billion repos today, according to Wind Information. The operation aims to keep liquidity reasonable and ample, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) decreased to 1.6748% from the 2.2914% on Thursday, Wind Information showed. The overnight repo average fell to 1.4208% from the previous 1.9306%.

YUAN: The currency weakened to 6.7006 against the dollar from 6.6943 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 6.6863 on Friday, compared with 6.7114 set on Thursday.

BONDS: The yield on 10-year China Government Bond was last at 2.8650%, up from Thursday's close of 2.8625%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.32% to 3,387.64 while the CSI300 index fell 0.41% to 4,466.72. Hong Kong market is closed for the Hong Kong Special Administrative Region Establishment Day.

FROM THE PRESS: China will raise CNY300 billion through the issuance of financial bonds to replenish capital for major projects to expand effective investment to boost employment and consumption, according to a statement on the gov website following the State Council executive meeting chaired by Premier Li Keqiang. The central government will provide appropriate interest discounts for two years, and guide financial institutions to increase financing support, the meeting said. China will kick off a batch of transportation projects including national expressways and inland river transport channels this year, the meeting said.

China’s property market is expected to gradually stabilise in the second half of the year, with first- and second-tier cities improve while third- and fourth-tier cities digest high inventories, the 21st Century Business Herald reported citing analysts. Housing transactions in cities in Yangtze River Delta such as Shanghai, Hangzhou and Hefei are likely to turn positive in H2, the newspaper said citing analysts. The average sales of the Top 100 developers was CNY35.64 billion in H1, decreasing 48.6% y/y, and there are nine developers in the 100-billion-yuan camp, compared to 19 same period last year, the newspaper said citing data by China Index Academy.