Industry news: 1) MOF, NDRC, PBOC and CBRC issued detailedguidance on LGFV management. 2) PBOC allows foreign institutions toparticipate in the domestic inter-bank bond market. 3) Huijin issuedRmb183.5bn debt for capital injection to two policy banks and participationin rights offering of BOC, ICBC, and CCB. 4) The 2Q10 report of paymentsystem said the NPL on credit cards declined.    Company news: 1) BoComm (+30% y/y), CMB (+60% y/y) and CCB(+27% y/y)’s interim results met or exceeded market expectations, andconfirmed our expectation that despite faster deposit growth and a decliningL/D ratio, medium-sized banks had enjoyed better NIM expansion during2Q10 due to higher L/D and favorable loan re-pricing schedule in the nearterm. 2) BOC and ICBC’s 1H10 results will be out after the market close onThursday. We expect 27% y/y earnings growth for ICBC and 29% growthy/y for BOC. 3) SZDB is expected to report interim results on Tuesdaynight. JPM expects SDB to deliver 40% yoy profit growth in 1H10. 4)CSRC approved ICBC’s Rmn25bn CB issuance last Wednesday, which mayboost its CAR by 0.3%.
    Open market operations: Following four weeks of consecutive netliquidity drain through open market operations, PBOC injected Rmb41bninto the market as total new issuance of Rmb125bn was offset by Rmb166bnbill maturity. Seven-days Repo and SHIBOR edged up by 12bps and 2bps,respectively, on the back of large amounts of bill issuance by MOF andother financial institutions. We believe market liquidity and inter-bank rateswill remain stable in the near term.