MNI China Daily Summary: Friday, July 7

EXCLUSIVE: Beijing will prioritise “high-quality” development aimed at lowering carbon emissions and meeting social goals, such as improving schools and medical services, with economic growth no longer a primary objective, a senior policy advisor to the National Development and Reform Commission told MNI.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY2 billion via 7-day reverse repos, with the rates at 1.90%. The operation has led to a net drain of CNY101 billion after offsetting the maturity of CNY103 billion reverse repo today, according to Wind Information. The operation aims to keep banking system liquidity reasonable and ample, the PBOC said on its website.

RATES: China's seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.7632% from 1.7151%, Wind Information showed. The overnight repo average rose to 1.1168% from the previous 1.0446%.

YUAN: The currency strengthened to 7.2336 against the dollar from 7.2465 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.2054, compared with 7.2098 set on Thursday. The fixing was estimated at 7.2455 by BBG survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.7100%, down from 2.7150% at Thursday's close, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.28% to 3,196.61 while the CSI300 index fell 0.44% to 3,825.70. The Hang Seng Index was down 0.90% to 18,365.70.

FROM THE PRESS: Regulators will promote the interconnection of the Mainland and Hong Kong REIT markets, according to Zhou Xiaozhou, director at China Securities Regulatory Commission. Speaking at a recent summit, Zhou said the CSRC plans to increase foreign investor participation in the REITs market and develop long-term sectors like social security and pension funds. China’s REIT market suffered recently from poor quality and efficiency of asset operations due to changes in the macroeconomic environment, however, in future authorities will enforce market mechanisms, risk monitoring and ensure the smooth operation of the secondary market, Zhou said. (Source: Securities Daily)

China will implement a batch of targeted, comprehensive and well-coordinated policy measures to stabilise growth and employment while preventing risks, said Premier Li Qiang in remarks at a seminar with researchers on Thursday. China's economic recovery and industrial upgrade has entered a critical stage, said Li. China must enhance communication between the government and private enterprises to improve decision-making, further boost confidence, and stabilise expectations, according to Li. (Source: Xinhua News Agency)

Market participants should not short China’s banking sector based on pessimistic assumptions, according to the state-owned newspaper Securities Times. The article followed a Goldman Sachs’ report which downgraded some major Chinese banks. The institutions have actively reduced their exposure to real-estate risks and the proportion of property developer loans and non-standard assets in the sector have declined to varying degrees. With the effort of local governments and financial institutions, existing risky projects are effectively resolved by lowering the interest burden and debt restructuring. Meanwhile, China’s infrastructure push this year will also boost banks’ government credit business, the newspaper said. (Source: Securities Times)