MNI China Daily Summary: Tuesday, July 25

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY44 billion via 7-day reverse repos with the rate unchanged at 1.90%. The operation has led to a net injection of CNY29 billion after offsetting the maturity of CNY15 billion reverse repo today, according to Wind Information. The operation aims to keep month-end liquidity stable, the PBOC said on its website.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8571% from 1.7684%, Wind Information showed. The overnight repo average decreased to 1.5136% from 1.5287%.

YUAN: The currency strengthened to 7.1365 against the dollar from 7.2031. The PBOC set the dollar-yuan central parity rate lower at 7.1406, compared with 7.1451 set on Monday. The fixing was estimated at 7.1936 by BBG survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.7175%, down from Monday's close of 2.6850%, according to Wind Information.

STOCKS: The Shanghai Composite Index edged up 2.13% to 3,231.52, while the CSI300 rose 2.89% to 3,915.12. The Hang Seng Index was up 4.10% to 19,434.40.

FROM THE PRESS: Authorities are expected to align more closely real-estate supply side policies with demand following the politburo’s recent meeting, according to Zhou Tao, deputy dean at the School of Real Estate of Chongqing University. Zhou said China’s cities had accumulated inefficiently used property stock as the country rapidly urbanised. Zhou expected policymakers in future to address structural and regional supply and demand imbalances through the revitalisation of existing stock space resources. Wang Yeqiang, director at the Real Estate Special Committee of the China Urban Economics Association said policymakers will address market weakness through supporting urban village transformation and emergency and dual-use public infrastructure construction. (Source: 21st Century Herald)

The recent politburo meeting signalled policy support to boost the A-share market in response to low stock valuations and investor confidence, according Yicai. The news agency noted the politburo’s rare use of the term "activate capital market and boost investor confidence" struck a different tone to previous “maintain stable operation of the capital market”. Ming Ming, chief economist at CITIC Securities, said the market expects policy support to boost the attractiveness of the capital market and guide the increase of direct financing. (Source: Yicai)

China is set to allow qualified high-tech small and medium-sized enterprises in Tianjin, Shanghai and 12 other provinces to borrow foreign debts independently within a limit of no more than USD10 million to further support their technological innovation, according to a draft document by the State Administration of Foreign Exchange seeking public comments. Qualified high-tech SMEs in other regions can borrow up to USD5 million. (Source: SAFE website)