In August 2003, with 21 business days, the national interbank market recorded 7082 deals, down 10.87 per cent year-on-year; while the turnover reached 2.01 trillion yuan, soaring 73.43 per cent over the same period of last year. The daily volume reached 95.93 billion yuan, 13.73 per cent higher than July. The lending rate and repo rate increased markedly, up 7.61 per cent and 14.06 per cent year-on-year respectively. Repo deals shrank sharply while the trading volume of each deal increased remarkably. The volume of bond trading increased nearly 20 times over the same period last year and short-term bonds traded actively. In the month, the funding situation in the interbank market presented a totally different picture from the past, and the lending rate and the repo rate rallied due to the one percentage point increase in the reserve ratio by the central bank.
Lending market: weighted rate rallied, and turnover remained stable
In August, the lending market concluded 935 deals, with a turnover of 259.72 billion yuan, up 231.90 per cent year-on-year. The weighted rate kept stable around 2.20 per cent in the first twenty days of the month. In the last ten days, however, the market changed greatly. On August 25, the lending rate reached 2.60 per cent, up 24.4 per cent over the previous day. The average daily volume of the month reached 12.37 billion yuan, similar to that in July.
The dominance of short-term maturities remained obvious. The lending volume of up to one-month varieties amounted to 99.64 per cent of the total, with IBO007 alone accounting for 71.29 per cent. The volume of IBO3M and IBO4M increased ten times and seven times respectively over that of last month, reflecting market concerns about long-term lending.
Repo market: volume per deal kept expanding, and weighted rate rose considerably
In August, the repo market slumped to 3191 deals with a turnover of 1.274 trillion yuan, up 20.16 per cent year-on-year. With the shrinking repo deals, the average turnover per deal continued its expansion this year to 399.3 million yuan. Similar to the lending rate, the weighted repo rate rose from 2.13 per cent at the beginning of the month to 2.78 per cent at end-August, an increase of 30.52 per cent. The average daily volume reached 60.67 billion yuan, a remarkable increase of 15.12 per cent over the 52.70 billion yuan last month.
Short-term maturities dominated in the repo market. The volume of varieties within one month amounted to 99.70 per cent of the grand total. The volume of R001 increased by 26.06 per cent year-on-year, but dropped by 26.63 per cent over July. The volume of R4M, though being zero in July, registered a 403.32 per cent growth over the same period of last year.
Bond market: turnover hit record high, and yields burst ahead
In August 2003, the bond market boomed with 2956 deals valued at 480.7 billion yuan, up 2.89 per cent and nearly 20 times respectively over the previous month and the same period of last year. The average daily volume reached the high of 22.89 billion yuan. Yields zoomed ahead, with the 7-year spot rate reaching a high of 2.84 per cent.
The central bank paper remained hot in the interbank market with a turnover of 223.05 billion yuan, 46.40 per cent of the total bond trading in August. By the end of August 2003, the central bank had issued 35 central bank papers of 455 billion yuan. In August, 150 billion yuan of central bank papers were issued and 81 billion yuan of the papers got mature.
Institutional financing
In August, the structure of institutional lending remained almost unchanged. The state-owned and joint stock banks remained the largest net lender, with a net lending volume of 903.28 billion yuan, up 22.54 per cent year-on-year. City commercial banks were the largest net borrower, up 43.99 per cent year-on-year. The net borrowing growth of securities companies is the highest, up 202.57 per cent year-on-year. The top three net lenders are state-owned and joint stock banks, city commercial banks and rural credit cooperatives. The net lending of securities companies went up considerably over last month.
(by Cui Wei)