In the first eleven months, the financial market generally performed in a stable manner. Bond issuance on the inter-bank market climbed slightly from the previous month, among which the share of issuance of medium-term bonds increased. The interest rates on the monetary market edged down coupled with abundant liquidity.
The inter-bank funding volumes declined slightly from the previous month, and bond pledged repo volumes increased from the previous month. Spot trading volumes declined marginally. The inter-bank bond index and exchange T-bond index continued to rise, and T-bond yield curve steepened. Stock indices fluctuated in a wide range and edged up, and the turnover on the stock market increased.
1. Bond issuance[1]
In the first eleven months of 2008, a total of 2083.876 billion yuan of bonds was issued on the inter-bank bond market, down 22.7 percent from the same period of the last year. The main reason behind the declined bond issuance was that the Ministry of Finance accumulatively issued 1.55 trillion yuan of special T-bonds in the second half of 2007. The issuance of short-term financing bills and asset-backed securities increased greatly form the same period of the last year and issuance of medium-term notes in April maintained stable. In the first eleven months of 2008, 591.31 billion yuan of book-entry T-bonds, 918.81 billion yuan of policy financial bonds, 83.2 billion yuan of non-policy financial bonds, 347.65 billion yuan of short-term financing bills, 25.406 billion yuan of asset-backed securities and 117.5 billion yuan of medium-term notes were issued on the inter-bank bond market. As of end-November, bonds in depository[2] registered 10044.88 billion yuan, including 9723.51 billion yuan of inter-bank bonds, accounting for 96.8 percent of the total.
In November, 222.676 billion yuan of bonds were issued on the inter-bank market, up 2.5 percent from October. Among this total, a lot more book-entry government bonds and policy financial bonds were issued, while the issuance of short-term financing bills and asset-backed securities decreased by a large amount.
In the first eleven months of 2008, medium-term bonds dominated the issuance structure on the inter-bank market, including 551.006 billion yuan of bonds with maturities less than one year, accounting for 26.4 percent; 1386.87 billion yuan of bonds with maturities from one to ten years, accounting for 66.6 percent; and 146 billion yuan of bonds with maturities more than ten years, accounting for 7.0 percent.
In terms of changes of the maturity structure, in November, the issuance of medium-term bonds composed of a large part of the total. Among this total, bonds with maturities less than one year accounted for 16.0 percent, bonds with maturities from one year to ten years accounted for 84.0 percent. No bonds with maturities more than ten years were issued.
2. Inter-bank Funding
In the first eleven months of 2008, the inter-bank market traded briskly with a turnover of 13.7 trillion yuan, or a year-on-year growth of 54.2 percent. In November, the amount of inter-bank funding registered 1186.47 billion yuan, down 0.5 percent from October. One-day products dominated the trading structure, posting a turnover of 854.41 billion yuan, accounting for 72 percent of the total.
In November, the interest rates on the inter-bank funding market decreased notably. The weighted average interest rate stood at 2.30 percent, down 40 basis points from October, or 2 basis points from January. The weighted average overnight funding rate declined 36 basis points from October, and the weighted average overnight funding rate of 7-day products fell 40 basis points from October.
At end-November, the weighted average overnight funding rate stood at 1.61 percent, down 69 basis points from beginning-November, and weighted average inter-bank funding rate of 7-day products stood at 2.11 percent, down 78 basis points from beginning-November.
3. Repos
In the first eleven months of 2008, the repo market was trading briskly. The turnover of bond pledged repos stood at 50.1 trillion yuan, up 27.5 percent year on year. In November, the turnover of bond pledged repo amounted to 5897.47 billion yuan, up 21.3 percent from October. One-day products dominated the trading structure, posting a turnover of 4437.57 billion yuan, accounting for 75.2 percent of the total bond pledged repos in November.
In November, repo interest rate on the inter-bank market displayed a sharp downward trend. The weighted average interest rate of bond pledged repos stood at 2.28 percent, down 40 basis points from the previous month, or down 53 basis points from January. At end-November, the weighted average interest rate of one-day bond pledged repos closed at 1.61 percent, down 69 basis points from beginning-November; the weighted average interest rate of 7-day bond pledged repos closed at 2.10 percent, down 78 basis points from beginning-November.
4. Spot Bond Trading
In the first eleven months of 2008, the turnover of spot bond trading on the inter-bank market was 33.3 trillion yuan, posting a year-on-year growth of 143.9 percent. In November, the turnover of spot bond trading on the inter-bank market totaled 3.4 trillion yuan, down 1.3 percent from October.
In the first eleven months of 2008, T-bond spot trading on the exchange market increased by a large margin and registered an amount of 179.01 billion yuan accumulatively, representing a year-on-year growth of 53.5 percent. In November, the turnover of spot T-bond trading on the exchange market continued to increase rapidly to 31.59 billion yuan, up 34.6 percent from October.
In the first eleven months of 2008, the bond market performed in an overall stable manner. In particular, form January to May, the inter-bank bond index crept up slowly; in June the index declined notably, down 1.37 percent; in July the index began to edge up; and from August to October, the index surged rapidly and closed at 127.
70 points at end-October, up 11.2 percent from the beginning of this year. In November, the inter-bank bond index fluctuated in a wide range. In later November, the index used to decline from 129.80 points to 126.64 points before rose rapidly, and closed at 129.00 points at end-November, up 1.3 percentage points from end-October.
In the first eleven months, exchange market T-bond index displayed an upward trend and closed at 119.39 points at end-November, up 0.43 percentage points from the beginning of November.
In November, short- and medium-term bond yield curves declined more sharply than long-term bond yields, and the overall bond yields curve shifted downward sharply. With T-bond yield curve on the inter-bank market as an example, the yields of short- and medium-term T-bonds with maturities less than ten years all declined, especially for short?Cterm bonds, and yields of T-bonds with maturities less than three years declined by more than 60 basis points.
5. Stock trading
Since the beginning of 2008, due to various domestic and international factors, the stock market has been sluggish and stock indices fluctuated amid a downward trend. The Shanghai Stock Exchange Composite Index opened at 5272.81 points at the beginning of 2008 and closed at 1871.16 points at end-November, down 3401.65 points, or 64.5 percent.
In November, the stock market fluctuated in a wide range and the indices edged up, with a large increase in average daily trading volume. The Shanghai Stock Exchange Composite Index opened at 1719.77 points at the beginning of November, and closed at 1871.16 points at the end of the month, up 8.8 percent. The average daily turnover on the Shanghai Stock Exchange was 59.55 billion yuan, representing an increase of 22.97 billion yuan from October.
(Sources: China Government Securities Depository Trust and Clearing Co., Ltd, China National Inter-bank Funding Center and the website of Shanghai Stock Exchange)
[1] Bond issuance only refers to issuance of RMB bonds issued on the inter-bank market (excluding central bank bills).
[2] Excluding deposited central bank bills.
Submit Date:2008-12-31 9:56:00
