MNI China Daily Summary: Monday, January 5

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY13.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY468.8 billion after offsetting maturities of CNY482.3 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.4312% from 1.4286%, Wind Information showed. The overnight repo average increased to 1.2624% from 1.2419%. 

YUAN: The currency strengthened to 6.9806 against the dollar from the previous 6.9890. The PBOC set the dollar-yuan central parity rate lower at 7.0230, compared with 7.0288 set before the New Year holiday. The fixing was estimated at 6.9888 by a Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8540%, up from the previous close of 1.8375%, according to Wind Information. 

STOCKS: The Shanghai Composite Index rose 1.38% to 4,023.42, while the CSI300 index increased 1.90% to 4,717.75. The Hang Seng Index edged up 0.03% to 26,347.24. 

FROM THE PRESS: China’s A-share market performance will be supported by the restructuring of the international order and the country's industrial innovation, potentially with an initial rise followed by stabilisation, Securities Times reported citing Li Qiusuo, chief domestic strategy analyst at China International Capital Corporation (CICC). A-shares are expected to see a sustained rise in a stable external environment ahead of the U.S. midterm elections in November with the implementation of a China-U.S. trade deal, but external disturbances may increase sharply after the elections, said Qiu Xiang, chief A-share strategist at CITIC Securities.

Authorities should maintain strong policy support to stabilise the real estate market, ensuring measures meet market expectations and avoid a piecemeal approach, while coordinating with other macro policies and preparing for potential developer bankruptcies and restructurings, according to a commentary published by the party-run magazine Qiushi. The magazine also said it was necessary to strengthen price monitoring and improve expert interpretation of sensitive indicators, including real estate investment, the number of foreclosed properties, and developers’ bankruptcies and debt restructurings, in order to better guide market expectations.

China saw nearly 600 million passenger trips during the New Year’s Day holiday, with 142 million people travelling domestically and generating revenue of CNY84.79 billion, the 21st Century Business Herald reported, citing official data. Catering consumption rose 2.8% y/y, while average daily foot traffic and turnover at 78 key business districts nationwide increased by 5.9% and 4.9%. Sales of health-related and smart wearable devices rose by more than 20% and 15% respectively.