China Market recoups 0.54%

Mainland China share market finished session edged higher on Friday, 15 March 2024, as the country's central bank left its key policy rate unchanged, preventing the yield gap from widening further.

The People's Bank of China (PBOC) said it was keeping the rate on the one-year medium-term lending facility (MLF) loans to some financial institutions unchanged at 2.50% from the previous operation. Market participants were concerning that cutting rates before a widely expected move by the Federal Reserve would widen yield differentials, potentially putting more pressure on the yuan, which has depreciated 1.3% against the dollar so far this year.

At close of trade, the benchmark Shanghai Composite index advanced 0.54%, or 16.40 points, to 3,054.64. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 0.94%, or 16.58 points, to 1,774.68. The blue-chip CSI300 index grew 0.22%, or 7.77 points, to 3,569.99.

ECONOMIC NEWS: China's New Home Prices Fall the Most in 13 Months- China's new home prices fell by 1.4% year-on-year in February 2024, marking the eighth consecutive month of decline and the sharpest drop since January 2023. Despite Beijing's efforts to support the property market and economic recovery, prices continued to fall. Prices fell faster in Shenzhen (-4.8%) and Guangzhou (-4.6%), while moderating in Beijing, Chongqing, and Tianjin. Shanghai was an exception with prices increasing by 4.2%. Monthly, new home prices decreased by 0.3%, consistent with January's decline.

CURRENCY NEWS: China's yuan was steady against a greenback on Friday. Prior to the market's opening, the People's Bank of China set the midpoint rate at 7.0975 per U.S. dollar, only 1 pip weaker than the previous fix of 7.0974. In the spot market, the onshore yuan CNY=CFXS yuan was changing hands at 7.1965 at midday, 15 pips weaker than the previous late session close.

PBoC Injects CNY 387 billion via MLF, Keeps Interest Rate Unchanged- The People's Bank of China (PBoC) injected CNY 387 billion through a one-year medium-term lending facility (MLF) on March 15th to maintain banking system liquidity. The central bank kept the interest rate at 2.50% to stabilize the yuan. With CNY 481 billion of MLF loans set to expire this month, the operation withdrew a net CNY 94 billion in fresh funds from the banking system. Additionally, the PBoC injected CNY 13 billion through a seven-day reverse repurchase operation while maintaining borrowing costs at 1.8%.

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