MNI China Daily Summary: Thursday, May 22

POLICY: China’s total outbound direct investment reached USD57.5 billion between January and April, up 7.5% y/y, the country’s Ministry of Commerce announced, noting USD51 billion represented non-financial investment, up 5.6% y/y.

POLICY: China’s total installed power generation capacity reached 3.5 billion kilowatts at the end of April, up 15.9% y/y, data released by the National Energy Administration showed.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY154.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY90 billion after offsetting the maturities of CNY64.5 billion today, according to Wind Information. 

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5660% from 1.5709% previously, Wind Information showed. The overnight repo average decreased to 1.4768% from the previous 1.5086%. 

YUAN: The currency strengthened to 7.2040 against the dollar from the previous 7.2065. The PBOC set the dollar-yuan central parity rate lower at 7.1903, compared with 7.1937 set on Wednesday. The fixing was estimated at 7.2035 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6850%, up from the previous close of 1.6675%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged down 0.22% to 3,380.19, while the CSI300 index decreased 0.06% to 3,913.87. The Hang Seng Index lost 1.19% to 23,544.31.

FROM THE PRESS: Chinese e-commerce companies expanding overseas face challenges as the EU and Japan signal plans to raise tariffs on low-value parcels, following the U.S.’s removal of its tax-free policy in early May. Since 2018, China’s cross-border e-commerce platforms’ small-value exports to the U.S. increased from USD5.3 billion to USD66 billion—fuelling a surge in parcel volumes from 138 million to 1.36 billion. (Source: Beijing Business Today)

Policymakers should emphasise supporting the real-estate market above boosting consumption to stabilise China’s domestic economy this year, said Liu Yuanchun, president at the Shanghai University of Finance and Economics. The government's strategy to expand domestic demand must go beyond short-term stimulus measures and focus on deeper structural adjustments, he added. To tackle persistently low prices authorities must curb excessive market competition and improve the overall regulatory environment, he said. (Source: Securities Daily)

The government will support SME firms in raising equity financing, accessing venture capital and enhancing regional stock exchanges for small business fundraising, according to a policy document released by eight government departments, including the National Financial Regulatory Administration. SMEs are encouraged to first list on the National Equities Exchange and Quotations board before transitioning to the Beijing Stock Exchange once they achieve growth. Authorities aim to increase social capital investment with innovative small businesses, the document said. (Source: Yicai)