MNI China Daily Summary: Monday, September 8

DATA: Exports in August reached USD321.8 billion, up 4.4% y/y, but slowing from the prior month's 7.2% growth, and behind the forecast 5.4%, data released by China Customs showed. Imports rose 1.3% in August, down from July's 4.1% rise and failed meeting the market consensus of a 3.5% increase.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY191.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY8.8 billion after offsetting maturities of CNY182.7 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.4523% from 1.4372%, Wind Information showed. The overnight repo average increased to 1.3570% from 1.3163%. 

YUAN: The currency strengthened to 7.1321 against the dollar from the previous 7.1378. The PBOC set the dollar-yuan central parity rate lower at 7.1029 on Monday, compared with 7.1064 set on Friday. The fixing was estimated at 7.1323 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8515%, up from the previous close of 1.8250%, according to Wind Information. 

STOCKS: The Shanghai Composite Index rose 0.38% to 3,826.84, while the CSI300 index increased 0.16% to 4,467.57. The Hang Seng Index gained 0.85% to 25,633.91. 

FROM THE PRESS: China’s foreign exchange reserves stood at USD3.3 trillion at the end of August, up 0.91% m/m, according to data released by the State Administration of Foreign Exchange (SAFE). Reserves increased as the U.S. dollar index weakened, while global financial asset prices strengthened, SAFE noted. Reserves had reached their highest level since 2016 which reflects the country’s capacity to withstand and manage external shocks, a chief economist told Securities Daily.

The former chairman at the China Securities Regulatory Commission (CSRC), Yi Huiman, has come under investigation for serious violations of discipline and law, the Central Commission for Discipline Inspection has announced. Yi, who stepped down from the CSRC chairmanship in February 2024 after a five-year tenure, had been serving as deputy director of the Economic Affairs Committee of the 14th National Committee of the Chinese People’s Political Consultative Conference (CPPCC).

Non-bank financial institutions have contributed more to China's recent market rally rather than household deposit migration, despite household deposits falling by CNY1.11 trillion in July, according to Guan Tao, former senior official at the State Administration of Foreign Exchange (SAFE). Residents savings have declined every July since 2009, reflecting seasonal factors rather than structural shifts, Guan said. He cautioned that attributing market movements to household deposits risks was reductive, noting that In April, deposits dropped by CNY1.39 trillion, an even larger fall than in July, yet the Wind All A Index fell 3.2%.