REPORT ON THE INTERBANK LENDING & BOND SYSTEM IN NOVEMBER 2004

Turnover rose slightly and market rates continued to drop

In the 22 trading days of November 2004, the national interbank RMB market concluded 6,063 deals with a turnover of 1.110 trillion yuan. The average daily turnover in November was 50.466 billion yuan, up 3.49 percent from October. Despite a short period of adjustment to the interest rate increase, money market rates all dropped amid ample fund supply. In the cash bond market, bonds of different maturities followed diverse tracks and the composite bond index fluctuated and dipped.

Lending rate slipped with fluctuation and turnover increased markedly

In November, 646 deals of credit lending were concluded, with a turnover of 115.06 billion yuan and a daily average of 5.23 billion yuan, down 43.23 percent year-on-year and up 30.62 percent month-on-month. The lending rate fluctuated, slipping from a month-opening 2.22 percent to 2.08 percent at the close. The high and low of weighted rates this month were 2.49 percent and 2.08 percent respectively.

As compared with October, among the eight tracked trading varieties of credit lending, two rose, five declined and one remained unchanged in terms of interest rate. Among them, long terms tumbled relatively far. The 3-month and 4-month dropped by 13.78 percent and 10 percent respectively. As for turnover, all varieties rose to different extents, except 1-month, which dropped. Among that, the interest rates for 3-month and 2-month led the gainers with a rise of 465.91 percent and 252.63 percent respectively.

Repo rate declined steadily and turnover rose slightly

In November, 3,316 repo deals were concluded on the interbank market with a trading value of 751.024 billion yuan. The average daily trading value stood at 34.137 billion yuan, down 30.03 percent year-on-year and up 1.85 percent month-on-month. Influenced by the interest rate increase in the first week of November, the repo rate registered around 2.26 percent. Due to ample fund supply on the market, it gradually fell to 1.96 percent. It closed the month at 2.01 percent. The high and low weighted rates were 2.28 percent and 1.96 percent respectively.

Compared with October, among the nine tracked trading varieties, three rose and five went down. The five losers dropped within 5 percent. In terms of turnover, the top gainer and loser are both long terms. The turnover of 4-month doubled, while the 3-month dropped markedly, down 65.07 percent month-on-month.

Outright repo turnover rose and interest rates rebounded after a drop

In November, 125 outright repo deals were concluded on the interbank market with a trading value of 20.24 billion yuan. The average daily trading value stood at 920 million yuan, up 39.39 percent month-on-month. The weighted interest rate moved within a narrow range of about 2.3 percent in the first half of the month but rose to 2.45 percent in the second half, before quickly dropping to a monthly low of 1.97 percent before it picked up. It closed the month at 2.24 percent, similar to the month-opening rate.

Compared with October, the 14-day outperformed the market and the rise in rate, deals and volume all increased, standing at 13.07 percent, 554.55 percent, 2398.47 percent respectively. The most active outright repo was 7-day repo, with its trading volume accounting for 64.94 percent of the grand total.

Short-term bonds remained active and the composite bond index climbed before falling

In November the cash bond market sealed 1,976 deals valued at 223.924 billion yuan with an average daily volume of 10.178 billion yuan, losing 21.59 percent year-on-year and 3.581 percent month-on-month. The composite bond index started the month at 1,158 before rising to 1,163.68 and then falling to close the month at 1,155.66. The monthly high and low were 1,163.68 and 1,149.26 respectively, a range of 14 points.

Institutional financing

In terms of borrowing, that of foreign financial institutions increased quickly, up 66.91 percent month-on-month. City commercial banks and rural credit cooperatives still ranked first and second, with borrowing volumes reaching 451.925 billion yuan and 157.148 billion yuan respectively.

On the lending side, joint stock banks rose rapidly, up 21.22 percent month-on-month. State-owned commercial banks and joint stock commercial banks remained the top two lenders, with lending volumes of 461.887 billion yuan and 318.449 billion yuan.