MNI China Daily Summary: Wednesday, July 9

POLICY: China’s Consumer Price Index rose 0.1% y/y in June, ending four consecutive months of decline and reversing May’s 0.1% drop, beating market expectations for a 0.1% fall, according to data from the National Bureau of Statistics.

POLICY: Pork prices in China’s Consumer Price Index declined in June, marking a shift from the positive trend over the first six months of the year, as the overall index rebounded to a 0.1% rise y/y, official data showed.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY75.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY23 billion after offsetting the maturity of CNY98.5 reverse repo today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.4767% from 1.4635%, Wind Information showed. The overnight repo average increased to 1.3171% from 1.3147%.

YUAN: The currency weakened to 7.1824 to the dollar from the previous 7.1732. The PBOC set the dollar-yuan central parity rate higher at 7.1541 on Wednesday, compared with 7.1534 set on Tuesday. The fixing was estimated at 7.1820 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.5925%, down from the previous close of 1.5950%, according to Wind Information.

STOCKS: The Shanghai Composite Index decreased 0.13% to 3,493.05, while the CSI300 index fell 0.18% to 3,991.40. The Hang Seng Index dropped 1.06% at 23,892.32.

FROM THE PRESS: China’s economy is expected to grow 5.07% y/y in Q2, slowing from 5.4% in Q1, Yicai.com reported, citing the average forecast of economists. First-half growth was mainly driven by front-loaded exports, counter-cyclical infrastructure investment, and the consumer trade-in programme, the newspaper said. Economists have also revised up their full-year GDP growth forecast to an average of 5.02% from 4.83%, with some anticipating additional policy support in response to weakening external demand, according to Yicai.

The People’s Bank of China said Tuesday it would allow more mainland-based institutions to invest offshore through the Bond Connect scheme, expanding access to non-bank investors such as brokerages, insurers, mutual funds, and wealth managers, Shanghai Securities News reported, citing Jiang Huifen, deputy director-general of the PBOC’s financial market department. The expansion aims to ease “asset shortage” pressures amid falling domestic interest rates, enhance financial market connectivity, and accelerate the internationalisation of yuan-denominated assets, the newspaper said, citing market insiders.

The National Development and Reform Commission has allocated an additional CNY10 billion in central budget investment to launch a work-for-relief campaign aimed at boosting employment and incomes, Securities Times reported. The funding will support 1,975 local government projects, with an expected CNY4.59 billion in labour payments to help an estimated 310,000 migrant workers return to rural areas, the newspaper said.