MNI China Daily Summary: Friday, June 13

EXCLUSIVE: China’s industrial electricity demand growth is likely to remain subdued through the rest of the year, as tighter usage rules aimed at curbing consumption make earlier forecasts of around 6% economy-wide growth increasingly difficult to achieve, local analysts told MNI.

POLICY: China’s sales revenue from equipment manufacturing increased by 7.5% year-on-year in May, with railway, ship and aerospace equipment increasing by 15.1%, data from the State Taxation Administration showed on Friday.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY202.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY67.5 billion after offsetting the maturity of CNY135 reverse repo today, according to Wind Information.

DATA: China's total social financing rose by CNY2.29 trillion in May, nearly doubling April's CNY1.16 trillion, mainly driven by the accelerated issuance of government bonds and increased corporate bond financing amid low interest rate environment, data released on Friday by the People's Bank of China showed.

Banks extended CNY620 billion in new loans in May, rising from April's CNY280 billion.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5020% from 1.5386% on Thursday, Wind Information showed. The overnight repo average increased to 1.4125% from 1.3726%.

YUAN: The currency strengthened to 7.1813 against the dollar from 7.1824 on Thursday. The PBOC set the dollar-yuan central parity rate lower at 7.1772, compared with 7.1803 set on Thursday. The fixing was estimated at 7.1679 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6150%, down from Thursday's close of 1.6200%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index was down 0.75% to 3,377.00, while the CSI300 index fell 0.72% to 3,864.18. The Hang Seng Index declined 0.59% at 23,892.56.

FROM THE PRESS: Hunan province will issue CNY20 billion of local government special bonds to resolve overdue corporate accounts, a nationwide first, Yicai.com reported. The initiative, first signalled during this year’s Two Sessions in March, broadens the use of such funds beyond traditional infrastructure projects. Analysts expect over 10% of this year’s CNY4.4 trillion special bonds will go towards resolving overdue accounts owed to enterprises, the newspaper said.

Several city commercial banks are replenishing capital, mainly through increasing local SOE shareholding or private placement, 21st Century Business Herald reported. Bank of Qingdao said one shareholder planned raising its holdings through a subsidiary, while Hong Kong-listed Luzhou Bank expected at least HKD1.85 billion through issuing one billion new H-shares via private placement, the newspaper said. Small and medium-sized banks face capital replenishment pressure amid narrowing interest spreads and asset quality, the Herald added.

China is willing to strengthen cooperation with the European Central Bank on reforming the international monetary system and will expand opening up, Premier Li Qiang told ECB President Christine Lagarde at a meeting in Beijing. The ECB welcomes establishing a meeting mechanism of central bank governors including China and remains committed to strengthening coordination with Chinese financial institutions and jointly addressing global challenges, Lagarde said. (Source: Xinhua)