MNI China Daily Summary: Thursday, June 26

POLICY: The government is working to ensure stable power supply and accelerate the development of energy production and infrastructure amid heatwaves sweeping the country, said Li Chao, deputy director and spokesperson for the National Development and Reform Commission.

LIQUIDITY: The PBOC conducted CNY509.3 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY305.8 billion after offsetting the maturity of CNY203.5 reverse repo today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.6850% from 1.6936% previously, Wind Information showed. The overnight repo average decreased to 1.3700% from the previous 1.3719%.

YUAN: The currency strengthened to 7.1684 against the dollar, from 7.1713 at Wednesday's close. The PBOC set the dollar-yuan central parity rate lower at 7.1620 on Thursday, compared with 7.1668 set on Wednesday. The fixing was estimated at 7.1601 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6160%, up from Wednesday's close of 1.6150%, according to Wind Information.

STOCKS: The Shanghai Composite Index fell 0.22% to 3,448.45, while the CSI300 index declined 0.35% to 3,946.02. The Hang Seng Index dropped 0.61% to 24,325.40.

FROM THE PRESS: Several financial institutions have engaged in the irregular disposal of non-performing assets, according to a report by the National Audit Office. The report found that two policy banks and three local small- and medium-sized banks illegally concealed non-performing assets totalling over CNY50 billion, by not downgrading assets or adjusting repayment plans. Authorities found loopholes in seven commercial banks real-estate financing, with CNY20 billion of lending illegally flowing to housing projects without certificates. (Source: 21st Century Business Herald)

Shanghai’s exports rose 11.5% during the first five months of the year, as foreign trade companies seized the opportunity to accelerate exports and diversified markets, Yicai news agency reported. The decline in exports to the U.S. was offset by growth in the EU, ASEAN and the Belt and Road countries, noted Wang Jia, assistant researcher at the Institute of Economics of the Shanghai Academy of Social Sciences. Although imports fell 4.8% y/y overall, inbound shipments of rubber, aircraft parts, audio and video equipment and industrial robots increased by 59.6%, 29.9%, 18.2%, and 23.1%.

Local governments are expanding consumption subsidies from conventional consumer goods, catering and tourism towards broader residential services such as childcare, Caixin.com reported. Guangdong province issued vouchers up to CNY2,000 per child to cover institutional childcare costs from June to August. While Hainan province has given up to CNY600 per month from June till December, targeting those under four.