MNI China Daily Summary: Monday, May 26

EXCLUSIVE: China and Britain are unlikely to sign a comprehensive trade agreement due to current political sensitivities but are expected to deepen economic ties later this year, building on Chancellor Rachel Reeves’ January restart of the UK-China Economic and Financial Dialogue (EFD) in Beijing, a British business leader in China told MNI.

LIQUIDITY: The PBOC conducted CNY382 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY247 billion after offsetting the maturities of CNY135 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.6545% from 1.5860%, Wind Information showed. The overnight repo average decreased to 1.5113% from 1.5652%.

YUAN: The currency strengthened to 7.1843 against the dollar from 7.1895 on Friday. The PBOC set the dollar-yuan central parity rate lower at 7.1833, compared with 7.1919 set on Friday. The fixing was estimated at 7.1766 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6450%, down from the previous close of 1.6500%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index dropped 0.05% to 3,346.84 while the CSI300 index decreased 0.57% to 3,860.11. The Hang Seng Index edged down 1.35% to 23,282.22.

FROM THE PRESS: China will accelerate innovation in renewable technology and find advanced solutions to deepen the green transformation of traditional industries, according to a State Council executive meeting, chaired by Premier Li Qiang. Authorities need to increase promoting clean energy and green products, while improving standards and policies to support enterprises to upgrade, the meeting said. (Source: Xinhua News Agency)

The People's Bank of China Governor Pan Gongsheng and Bank Indonesia Governor Perry Warjiyo have signed a memorandum of understanding to promote bilateral transaction settlement in local currencies, Xinhua news agency reported. The new agreement allows for local tender transactions through capital and financial accounts, expanding the scope of an MoU signed in 2020 covering the current account and direct investment, according to Xinhua.

Authorities remain pressured to stabilise employment and expand consumption, according to Guan Tao, former senior official at the State Administration of Foreign Exchange. Rising consumer loan interest rates have dampened residents' demand for credit and tariff-related economic pressures have reduced their risk appetite and willingness to spend, Guan added. The property market has not established a solid foundation in April as household's weak demand and unwillingness to accept additional leverage led to year-on-year declines in down payments and personal mortgage loans, widening by 7.1 and 12.9 percentage points, respectively, Guan noted. (Source: Yicai)