MNI China Daily Summary: Thursday, May 15
EXCLUSIVE: Local authorities are likely to cut homebuying costs further and ramp up purchases of unsold homes and land, though broader stimulus will depend on economic performance and China-U.S. trade talks, advisors told MNI, adding that mortgage rates could fall another 20 basis points.
POLICY: China has announced a 30 day visa free policy for ordinary passport holders from Brazil, Argentina, Chile, Peru and Uruguay, the country’s Ministry of Foreign Affairs announced.
LIQUIDITY: The PBOC conducted CNY64.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY94.1 billion after offsetting the maturities of CNY158.6 billion today, according to Wind Information.
RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.5245% on Thursday from 1.5171% previously, Wind Information showed. The overnight repo average rose to 1.4120% from the previous 1.4096%.
YUAN: The currency weakened to 7.2132 against the dollar, from 7.2083 at Wednesday's close. The PBOC set the dollar-yuan central parity rate higher at 7.1963, compared with 7.1956 set on Wednesday. The fixing was estimated at 7.2169 by Bloomberg survey today.
BONDS: The yield on 10-year China Government Bonds was last at 1.6700%, up from Wednesday's close of 1.6650%, according to Wind Information.
STOCKS: The Shanghai Composite Index fell 0.68% to 3,380.82, while the CSI300 index declined 0.91% to 3,907.20. The Hang Seng Index fell 0.79% to 23,453.16.
FROM THE PRESS: The People’s Bank of China is expected to cut the reserve requirement ratio by another 50 basis points later this year, following the 50bp cut on Thursday, Securities Daily reported, citing analysts. Monetary policy will remain relatively loose to support fiscal efforts in 2025, said Li Chao, chief economist at Zheshang Securities, who also expected a 20bp interest rate cut within the year, following the 10bp cut to the policy rate last week.
Exporting firms have agreed with U.S. buyers to speed up orders, production and shipment during the 90 day temporary suspension of reciprocal tariffs, Yicai.com has reported. Li Mingyang, a general manager at an electric fan firm, said shipping space to the U.S. has become tight, costs have increased and customers are urging shipment. Zhou Nan, secretary-general at the Home Appliance Sector of the China Chamber of Commerce, said the industry was unlikely to set up factories in the U.S. given the high costs and tight labour market.
China has suspended the addition of 17 U.S. firms added to the unreliable entity list, and the 28 entities placed on the export control list during April for 90 days, the Ministry of Commerce has announced. (Source: People’s Daily)
