MNI China Daily Summary: Tuesday, Sept 2

EXCLUSIVE: The need for Beijing to deploy additional large-scale stimulus such as extra special treasuries this year is fading as the economy stays on track to meet its 5% growth target under current fiscal settings, though advisors told MNI further Q4 measures may still be deployed to secure 2026 momentum.

POLICY: The number of newly opened stock trading accounts reached 2.65 million in August amid an A-share market rally, far exceeding the same period last year, Securities Times reported citing data from the Shanghai Stock Exchange.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY255.7 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY105.7 billion after offsetting maturities of CNY405.8 billion today, according to Wind Information

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4375% from the previous 1.4454%, Wind Information showed. The overnight repo average increased to 1.3141% from 1.3122%.

YUAN: The currency weakened to 7.1476 against the dollar from the previous 7.1332. The PBOC set the dollar-yuan central parity rate higher at 7.1089, compared with 7.1072 set on Monday. The fixing was estimated at 7.1335 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.8173%, down from the close of 1.7690% previously, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index was down 0.45% to 3,858.13, while the CSI300 index fell 0.74% to 4,490.45. The Hang Seng Index lost 0.47% at 25,496.55.

FROM THE PRESS: The expected U.S. Federal Reserve rate cut in September and potential positive outcome in China-U.S. trade talks could drive further appreciation of the yuan this year, on top of capital inflows amid the A-share rally, Yicai.com reported citing analysts. The offshore yuan is close to breaking below 7.1 against the U.S. dollar, which may trigger increased foreign exchange settlement by exporters. In July, the proportion of forex settlement by exporters surged from 46.1% to 54.9%, reaching a new high since September 2024, indicating increasing willingness to sell dollars, the newspaper said.

Inter-bank market liquidity will likely remain stable in September amid fiscal spending and central bank support, despite a large amount of open market maturities, Shanghai Securities News reported citing analysts. Over CNY3.2 trillion of funds will mature in reverse repos and three-month outright reverse repo in the first week, alongside CNY300 billion six-month outright reverse repo and CNY300 one-year medium-term lending facilities later in the month, the newspaper said. However, the issuance of government bonds and the allocation of fiscal funds will add nearly CNY190 billion of excess reserves to the banking system, with regular fiscal revenue and expenditure likely to provide more than CNY1.1 trillion of liquidity support, the newspaper said citing analysts from Sealand Securities.

Authorities should focus on addressing the shortage of high-quality service supply to boost consumer spending, according to Securities Times in a commentary. It is necessary to expand pilot opening up in the fields of telecommunications, medical care and education to import more mature services, while reducing restrictive measures in the domestic market, including relaxing market access and optimising regulatory models, the newspaper said.