TURNOVER REMAINED STEADY AND EFFECTS OF OPEN MARKET OPERATION WERE SIGNIFICANT
There were 68 trading days in the third quarter of 2002. The National Interbank Funding Center processed 23,626 transactions with a total turnover of RMB 3.62 trillion yuan. The average daily turnover was RMB 53.3 billion yuan, up 193.99 per cent over the same period in 2001 and 3.04 per cent up over last quarter. Influenced by the open market operation of the PBC, market rates rose in August and September, and the repo rate increased by 3.64 per cent over last quarter.
The turnover in the lending market increased and the weighted rate moved upwards in fluctuation
Compared with the weak market during the first half of this year, the lending market became active and the turnover increased 29.03 per cent over last quarter. Especially during the last few days of September, the daily turnover exceeded RMB 10 billion yuan, which has been seen rarely in recent years.
Influenced by the open market operation of the PBC, the lending market rate moved upwards in fluctuation. The lowest daily weighted average rate in this quarter was 1.973, and the highest 2.288 with a spread of 31.5 bps. Except for the 60-day, the turnover of other varieties all increased in the third quarter, among which the 20-day and 120-day increased by 224.50 per cent and 2,287.96 per cent respectively over last quarter.
The turnover of
the repo market stably increased and the weighted rate rose remarkably
The repo market had no obvious change as compared with last quarter. Under the influence of the open market operation, the almost horizontal daily weighted average rate rose from 1.950 on the 8th to 2.365 on the 25th .
The open market operation of the PBC affected not only the rate, but also the turnover. After the rapid increase of the rate on August 19, turnover decreased swiftly. The turnover of the 21-day, 6-month and 1-year --- the main varieties of the open market operation recently --- increased by 134.74 per cent, 1,094.41 per cent and 4,777.94 per cent respectively as compared with last quarter. The 7-day, which had increased stably in the past, fell by 3.62 per cent as compared with last quarter.
Large downturn in bond trading
After the booming second quarter, the bond market was cooled by the rising open market operation rate. With the average yield being pushed up gradually, several newly issued bonds fell under the par value. The turnover of the third quarter slumped by 55.04 per cent as compared with last quarter.
The immediate reaction of the traders to the dropping price was to quit trading. With the gradual decline in daily turnover, the liquidity problem emerged once again. Because of inactive trading, the price became relatively steady. The Interbank Bond Index leveled off in September after its rapid decrease in July and August.
Institutional funding situation
The structure of institutional financing did not change in the third quarter of 2002. State-owned commercial banks were still the biggest lenders, and their net lending increased by 51 per cent as compared with last quarter. City commercial banks were the biggest borrowers, and their net borrowing increased by 6.87 per cent in comparison with last quarter and amounted to 43.92 per cent of all financial institutions. Insurance companies, investment funds and securities companies were inactive in trading. Remarkably, the borrowing of the investment funds declined 68.35 per cent as compared with last quarter.
(by Chen Lifeng)