MNI China Daily Summary: Friday, February 28

EXCLUSIVE: Short-term coking coal futures could fall below CNY1,000 a tonne, extending their 3.66% fall this month to CNY1,093, should next week’s Two Sessions meeting fail to deliver policy stimulus that meets market expectations, local analysts told MNI, noting supply remained high.

POLICY: China will take necessary countermeasures should the U.S impose another 10% tariff on Chinese exports on March 4, China Ministry of Commerce told reporters.

POLICY: China will implement more proactive macroeconomic policies to expand domestic demand and promote technological innovation, Xinhua News Agency reported following a meeting held by the Politburo, the country's top decision-making body.

POLICY: China will further boost consumption to expand domestic demand as the external environment deteriorates, according to President Xi Jinping in his latest article published by Qiushi magazine.

LIQUIDITY: The People's Bank of China (PBOC) conducted CNY284.5 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY102 billion after offsetting the maturity of CNY182.5 billion today, according to Wind Information.

RATES: The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 2.1288% from 2.3282% on Thursday, Wind Information showed. The overnight repo average decreased to 1.8607% from the previous 1.8894%.

YUAN: The currency weakened to 7.2838 versus 7.2710 from Thursday's close. The PBOC set the dollar-yuan central parity rate lower at 7.1738 on Friday, compared with 7.1740 set on Thursday. The fixing was estimated at 7.2849 by Bloomberg survey today.

BONDS: The yield on 10-year China Government Bonds was last at 1.7660%, up from Thursday's close of 1.7600%, according to Wind Information.

STOCKS: The Shanghai Composite Index fell 1.98% to 3,320.90, while the CSI300 index was down 1.97% to 3,890.05. The Hang Seng Index tumbled 3.28% to 22,941.32.

FROM THE PRESS: China has called on the U.S. to withdraw its investigation into imported copper given Beijing net imports the metal and exports only a small amount, according to He Yadong, spokesperson of the Ministry of Commerce. Allegations that Beijing uses subsidies and excess capacity to undermine competition are completely groundless, He said. In the long term, U.S. tariffs on copper imports may prompt major suppliers such as Chile, Canada and Mexico to shift business to China and Europe, said Xu Jigang, a global senior partner at Roland Berger.

China’s old-for-new subsidy scheme only boosts economic growth and consumption in the short term, given its limited scope, according to Lu Ting, chief economist at Nomura Securities China. Looking longer term, authorities should increase support for vulnerable groups and improve the country's social welfare system, especially migrant workers and farmers' pension. China’s February CPI may fall back to zero as agricultural product prices fell after the Spring Festival, Lu added. (Source: Yicai)

The A-share market’s financing balance hit CNY1.92 trillion as of Feb 26, marking the second time above the CNY1.9 trillion mark since July 2015, Securities Times said. Funds mainly flowed into electronics, non-bank finance, computing, power equipment and pharmaceuticals sectors, which all received more than CNY100 billion, according to the newspaper’s calculation. Investors expect computing power and AI application sectors to provide long-term market growth, the newspaper said, citing analysts.