MNI Indicators: MNI China Liquidity Index™ – Rises To 55.3 In May

Key Points – May Report

Local traders in China’s interbank market reported a moderate tightening of liquidity and a notable decline in economic sentiment in May, with participants concerned the recovery lacks momentum given recent weak data, the latest MNI China Liquidity Survey showed. The MNI China Liquidity Condition Index rose to 55.3 in May, up from 51.3 in April, the fourth consecutive month of tightening, with 28.9% of the traders reporting tighter conditions.

• The MNI China Economy Condition Index fell to 53.9, down from 68.4 last month, the largest m/m drop since last October.
• The MNI China PBOC Policy Bias Index stood at 40.8, down from 44.7, with 81.6% of the traders believing the policy stance would be maintained.
• The MNI China Guidance Clarity Index dropped to 56.6 from previous 57.9, with 86.8% of participants understanding well the PBOC’s policy intentions.

The MNI survey collected the opinions of 38 traders with financial institutions operating in China's interbank market, the country's main platform for trading fixed income and currency instruments, and the main funding source for financial institutions. Interviews were conducted May 15 – May 26.