MNI China Daily Summary: Wednesday, Jan 24

POLICY: Easier U.S. monetary policy should give the People’s Bank (PBOC) of China more room to support the economy, Governor Pan Gongsheng told reporters, announcing a 50-basis-point reserve requirement ratio cut effective Feb 5 to unlock CNY1 trillion.

POLICY: China’s top securities regulator said it will make investor protection, especially for small- and mid-sized investors a top priority and prompt listed companies to provide better returns to stabilise the capital market and restore confidence, according to a statement on China Securities Regulatory Commission's website.

LIQUIDITY: The PBOC conducted CNY463 billion via 7-day reverse repo, with the rates unchanged at 1.80%. The reverse repo operation has led to a net drain of CNY84 billion reverse repos after offsetting CNY547 billion maturity today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) increased to 1.8813% from 1.8386%, Wind Information showed. The overnight repo average increased to 1.8111% from 1.7630%.

YUAN: The currency strengthened to 7.1641 to the dollar from 7.1695 on Tuesday. The PBOC set the dollar-yuan central parity rate lower at 7.1053 compared with 7.1117 set on Tuesday. The fixing was estimated at 7.1788 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 2.5070%, up from Tuesday's close of 2.5030%, according to Wind Information.

STOCKS: The Shanghai Composite Index increased 1.80% to 2,820.77 while the CSI300 index rose 1.40% to 3,277.11. The Hang Seng Index increased 3.56% at 15,899.87.

FROM THE PRESS: Market insiders have called for over CNY1 trillion of stabilisation fund to inject incremental liquidity into the A-share stock market and help reverse pessimistic investor expectations, according to various reports. 21st Century Business Herald noted, while there are no obvious negative factors that could trigger a market crash, the Shanghai Composite Index continued to fall to a three-year low of 2,724 points on Wednesday. The scale of the funds should be CNY2-5 trillion, as the size of such funds is mostly between 3-6% of the total market value, according to a report by CITIC Securities.

Shanghai Securities News reported 20 provinces have announced their economic growth targets for 2024, with most of them aiming at 5-6% GDP gains. Beijing, Shanghai and Guangdong, the first provinces with a GDP exceeding CNY13 trillion last year, have all set the target at 5%. An official from Beijing city said “about 5%” growth is required to stabilise expectations, boost confidence and achieve employment and residential income goals. Meanwhile, local authorities have emphasised high-quality development by including other indicators related to technological innovation, and environmental protection.

China will boost crop yields and stabilise farms to ensure grain output remains above 1.3 trillion catties in 2024, Pan Wenbo, director at the Ministry of Agriculture told reporters at a press conference. China produced a record high of 1.39 trillion catties in 2023, up 17.76 billion y/y, overcoming severe flooding and droughts across the country, added Deng Xiaogang, deputy minister at the Ministry of Agriculture. The 21st Century Herald noted rural residents per capita disposable income reached 21,691 yuan in 2023, up 7.6% y/y, according to National Bureau of Statistics data.