Li Xin

Statistics provided by the People's Bank of China (PBoC), China's central bank show that the operation of China's financial market is stable as a whole: bond issue on inter-bank market kept increasing; the proportion of long-term bonds issued increased obviously; market fluidity as a whole was sufficient; interest rate on money market rose rapidly; the amount of borrowing on inter-bank market rose somewhat; bonds repo decreased slightly; inter-bank bond index and exchange national bond index dropped slightly; national bond yield curve moved upward flatly; spot bonds transaction increased; and stock market index rose rapidly, with average daily transaction rebounding sharply.

Bond issue: bonds issued on inter-bank bond market totaled RMB2.20877 trillion in the first seven months, up 85.7% year on year. The issue in July alone was RMB493.08 billion, up 6.6% month on month. By the end of July, the managed capacity of the bond market was RMB11.9 trillion, and that of inter-bank bond market was RMB11.6 trillion, accounting for 97.4% of the total.

Bonds issued on inter-bank bonds market in the first seven months are mainly medium- and short-term bonds. In terms of trend of bond term structure, the proportion of long-term bonds issue increased sharply month on month in July.

Inter-borrowing transaction: the transaction of the inter-bank borrowing market was RMB10 trillion in the first seven months, up 14.3% year on year. It was RMB2.1 trillion in July alone, up 7.3% month on month. One-day variety remained to be major variety traded, and one-day variety accounted for 83.5% of the transaction of all inter-banking borrowing in July.

The weighted average interest rate for inter-bank borrowing kept rising in July, and fluctuated more violently. The weighted average interest rate for inter-bank borrowing was 1.32% in July, 41 base points higher month on month; and that for 7-day variety was 1.62%, 56 base points higher. The highest weighted average interest rate for 7-day variety occurred on July 21, being 2.12%; and the lowest was 1.19%, occurred on July 1.

Repo transaction: transaction on repo market increased sharply year on year in the first seven months. Pledged repo transaction was RMB40 trillion in the first seven months, up 35.5% year on year; and RMB6 trillion in July alone, down 18.3% month on month. One-day variety remained to be major variety traded, accounting for 67.8% of all pledged repo transaction reported in July.