MNI China Daily Summary: Thursday, June 19

EXCLUSIVE: China is likely to lower homebuying costs further by reducing down-payment ratios and mortgage rates as transactions and prices weaken, advisors and analysts told MNI, calling for increased central-government funding to stabilise the sector.

POLICY: China hopes members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership will accelerate China's accession to the trading bloc and take concrete steps to support multilateralism and free trade, according to Ministry of Commerce spokesperson He Yadong.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY203.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY84.2 billion after offsetting the maturity of CNY119.3 reverse repo today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.5441% from 1.5267% previously, Wind Information showed. The overnight repo average increased to 1.3713% from the previous 1.3706%. 

YUAN: The currency weakened to 7.1882 against the dollar from the previous 7.1868. The PBOC set the dollar-yuan central parity rate lower at 7.1729, compared with 7.1761 set on Tuesday. The fixing was estimated at 7.1905 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6412%, up from the previous close of 1.6375%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.79% to 3,362.11, while the CSI300 index decreased 0.82% to 3,843.09. The Hang Seng Index lost 1.99% to 23,237.74.

FROM THE PRESS: China's logistics prosperity index reached 50.6 in May, down 0.5 points from April but remained above the expansionary mark of 50, data from the China Federation of Logistics and Purchasing showed. Hu Han, deputy chief economist at the China Logistics Information Center, said the eastern region’s total business sub index rose 0.1 pp but remained lower than the national average given the continued external impact on logistics businesses. The logistics order volume for home appliances and communication products increased by 10-15% year-on-year, Hu said, adding that the aviation transportation industry’s total business index reached 52.5, a month-on-month decline of 2.8 points.

The government must focus on expanding effective demand and promote a sustained improvement in the economic operation, Premier Li Qiang told officials during a tour of Jiangsu province. China welcomes companies from all countries to invest and start businesses and will increase policy support and service guarantees for foreign firms. Officials must boost the role of the China-Europe trains and cross-border e-commerce, and promote the high-quality construction of the Belt and Road, Li added.

The PBOC latest move to establish a Digital Yuan International Operating Center marks a shift toward internationalising the digital yuan, in contrast to earlier efforts focused on replacing cash domestically, International Finance News reported, citing Pan Helin, an advisor to the Ministry of Industry and Information Technology. The announcement facilitates overseas transactions through combining blockchain-based Letter of Credit refinancing with the digital yuan to achieve real-time clearing of cross-border payments, said Tian Xuan, associate dean at PBC School of Finance, Tsinghua University.