MNI China Daily Summary: Wednesday, June 4

POLICY: The European Chamber of Commerce in China supports the end goal of the EU’s recent measure to restrict Chinese medical device manufacturers from public procurement tenders, aimed at ensuring reciprocal market access, a statement from the chamber said.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY214.9 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY0.6 billion after offsetting the maturities of CNY215.5 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.5549% from 1.5496%, Wind Information showed. The overnight repo average decreased to 1.4133% from 1.4136%.

YUAN: The currency strengthened to 7.1890 to the dollar from 7.1895 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 7.1886, compared with 7.1869 set on Tuesday. The fixing was estimated at 7.2005 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.6712%, down from Tuesday's close of 1.7225%, according to Wind Information.

STOCKS: The Shanghai Composite Index was up 0.42% to 3,376.20, while the CSI300 index rose 0.43% to 3,868.74. The Hang Seng Index edged up 0.60% at 23,654.03. 

FROM THE PRESS: Small and medium-sized banks are expected to accelerate merger and reorganisation activity aimed at improving quality, with the number of banking institutions likely to drop to 3,000 from a peak of 4,600, 21st Century Business Herald reported, citing analysts. Increasing numbers of rural banks will be merged and restructured into commercial bank branches, which will enhance service capabilities and risk resistance, the newspaper said, citing Dong Ximiao, chief researcher at Merchants Union Consumer Finance. In total, 184 small- and medium-sized banks have been approved for merger or dissolution in the first five months this year, the herald noted.

Zhejiang province has issued CNY1.6 billion of special bonds specifically for purchasing existing commercial housing, Yicai news agency has reported. Industry insiders said although the value amounted to only 3% of the special bonds issued by the province in total, the move had significant policy implications and the proportion may rise as related projects improve. The bonds were rated AAA and backed by provincial government credit, and would support eight affordable housing projects in Huzhou, Wenzhou, and Jiaxing. Zhejiang’s initiative provides a replicable model for de-stocking efforts in lower tier regions, according to Yan Yuejin, deputy director at E-house China Research Institute, who noted third- and fourth-tier cities face high housing inventory and slow sales.

China’s social logistics value increased by 5.5% y/y in April, down 1.4 percentage points compared to March, as operations withstood the pressure of external shocks and maintained a generally stable and positive trend, according to Meng Yuan, an analyst at the China Logistics Information Center. In the first four months, the logistics value of industrial products increased by 5.7% y/y, down 0.2 pp compared to the first quarter, while in April, China’s e-commerce logistics index was 111 points, up 1.1 points from March.