MNI China Daily Summary: Wednesday, September 10

EXCLUSIVE: China’s latest round of consumption stimulus will emphasise boosting services, with local governments taking the lead as near-term, large-scale central-government subsidies remain unlikely due to supervision difficulties that could dilute their effectiveness, advisors told MNI.

POLICY: Trade tensions between the U.S. and China are eroding business confidence and pushing revenue expectations to record lows, the American Chamber of Commerce in Shanghai said. 

POLICY: Officials have released a national standard for business credit evaluation indicators, aiming to expand the scale and coverage of loans for individual businesses, the State Administration for Market Regulation said. 

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY304 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net injection of CNY74.9 billion after offsetting maturities of CNY229.2 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4763% from 1.4789%, Wind Information showed. The overnight repo average increased to 1.4275% from 1.4163%.

YUAN: The currency strengthened to 7.1221 to the dollar from 7.1248 on Tuesday. The PBOC set the dollar-yuan central parity rate higher at 7.1062, compared with 7.1008 set on Tuesday. The fixing was estimated at 7.1369 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.9000%, up from Tuesday's close of 1.8625%, according to chinamoney.com.cn.

STOCKS: The Shanghai Composite Index was up 0.13% to 3,812.22, while the CSI300 index edged up 0.21% to 4,445.36. The Hang Seng Index rose 1.01% at 26,200.26.

FROM THE PRESS: China’s bull market shows few signs of speculation, with A-share market gains largely driven by institutional capital while retail participation remains subdued, according to Hong Hao, managing partner and chief economist at Lotus Asset Management. Hong expects the Shanghai Composite Index to climb beyond 4,000 points by year-end, noting that institutional inflows continue to build while retail investors remain cautious. “We haven’t seen large-scale shifts of funds from bank deposits into brokerage accounts, traditional hallmarks of market exuberance,” he said. Instead, capital has flowed heavily into ETFs and similar vehicles, largely managed by institutions and supplemented by foreign participation. (Source: Yicai)

The PBOC Governor Pan Gongsheng has signed bilateral local currency swap agreements with European counterparts, aiming to facilitate trade and investment, and safeguard financial market stability, the bank said. Under the renewed arrangements, the swap line between China and the Eurozone is set at CNY350 billion for three years. The agreement with Switzerland is valued at CNY150 billion with a five-year term, while the swap with Hungary is set at CNY40 billion, also for five years. (Source: PBOC)

China’s E-Commerce Logistics Index rose to 112.3 in August, up 0.3 points from July and marking the sixth straight monthly increase, according to data from the China Federation of Logistics & Purchasing. Liu Yuhang, director at the China Logistics Information Centre, said the gains reflect stronger consumer demand and improved convenience driven by e-commerce platforms. With extreme weather easing in August, logistics service quality also improved, the federation noted. Platform data showed a pickup in sales and promotional activity compared with July, underscoring the growing impact of consumption-supportive policies. (Source: 21st Century Herald)