Download → Financial Market Report (March 2023).pdf

1. Bond Issuance

In March, total bond issuance registered RMB7,271.38 billion. The issuance of treasury bonds, local government bonds, financial bonds, corporate credit bonds,1 credit-asset-backed securities, and interbank certificates of deposit (CDs) reached RMB806.0 billion, RMB890.04 billion, RMB1,259.95 billion, RMB1,724.33 billion, RMB37.41 billion, and RMB2,508.88 billion, respectively.

As of end-March, outstanding bonds held in custody amounted to RMB147.5 trillion, including RMB127.8 trillion in the interbank bond market and RMB19.7 trillion in the exchange-traded bond market. By bond type, treasury bonds, local government bonds, financial bonds, corporate credit bonds, credit-asset-backed securities and interbank certificates of deposit (CDs) in custody recorded an outstanding amount of RMB25.5 trillion, RMB36.5 trillion, RMB35.3 trillion, RMB32.2 trillion, RMB2.4 trillion and RMB14.1 trillion, respectively. Commercial bank over-the-counter (OTC) bonds in custody recorded an outstanding amount of RMB43.72 billion.

2. Bond Market

In March, the turnover of cash bond trading in the interbank bond market saw a year-on-year increase of 14.3 percent (a month-on-month increase of 14.2 percent) to RMB28.5 trillion, with the daily average standing at RMB1,237.12 billion. Of the total turnover, transactions with each trade between RMB5 million and RMB50 million accounted for 43.2 percent, while those with each trade above RMB90 million made up 50.0 percent. The average value per trade was RMB48.54 million. The turnover of cash bond trading in the stock exchange bond market was RMB3.6 trillion, averaging RMB156.84 billion daily. A total of 232,000 transactions were done in the commercial bank OTC bond market, with the total turnover of RMB48.29 billion.

3. Bond Market Opening-up

As of end-March 2023, overseas institutions held RMB3.3 trillion, or 2.2 percent of the outstanding bonds in custody in China’s bond market. Specifically, their holdings in the interbank bond market amounted to RMB3.2 trillion. By bond type, overseas institutions held RMB2.1 trillion of treasury bonds, or 66.5 percent of their bond holdings in the interbank bond market, and RMB0.7 trillion of policy financial bonds, or 21.9 percent of their bond holdings in the interbank bond market.

4. Money Market

In March, interbank money market transactions increased by 34.1 percent year on year (a month-on-month increase of 31.2 percent) to RMB158.2 trillion. Specifically, pledged repo transactions rose by 35.3 percent year on year (a month-on-month increase of 30.7 percent) to RMB144.5 trillion; outright repo transactions went down by 8.2 percent year on year (a month-on-month increase of 26.9 percent) to RMB512.08 billion; and interbank lending transactions increased by 24.3 percent year on year (a month-on-month increase of 37.4 percent) to RMB13.2 trillion. Repo transactions of exchange-traded standardized bonds went up by 17.2 percent year on year (a month-on-month increase of 15.8 percent) to RMB44.3 trillion.

In March, the monthly weighted average interest rate on pledged repos stood at 1.85 percent, down by 22 bps from a month earlier, while the monthly weighted average interest rate on interbank lending was 1.70 percent, down by 22 bps from a month earlier.

5. Bill Market

In March, commercial drafts that were accepted totaled RMB2.2 trillion while those discounted amounted to RMB1.5 trillion. As of end-March, the outstanding amount of accepted commercial drafts stood at RMB18.3 trillion, and those discounted registered RMB12.2 trillion.

In March, 90,000 micro, small, and medium-sized enterprises (MSMEs) issued bills, accounting for 91.5 percent of all issuing enterprises. Bills issued by MSMEs reached RMB1.4 trillion, representing 63.1 percent of the total issuance. Of all the enterprises that discounted bills, 82,000 (96.4 percent) were MSMEs. The bills they discounted registered RMB1.1 trillion, accounting for 73.2 percent of the total amount of discounted bills.

6. Stock Market

At end-March, the Shanghai Composite Index closed at 3272.9 points, decreasing by 6.8 points (0.2 percent) from a month earlier. The Shenzhen Component Index closed at 11726.4 points, decreasing by 57.4 points (0.5 percent) from a month earlier. In March, the average daily turnover on the Shanghai Stock Exchange increased by 10.4 percent month on month to RMB398.96 billion and that on the Shenzhen Stock Exchange decreased by 0.9 percent month on month to RMB530.97 billion.

7. Structure of Bond Holders in the Interbank Bond Market

As of end-March, there were 3,980 incorporated institutions in the interbank market, all of which were financial institutions. Of the incorporated institutions, 2,189 were holders of debt-financing instruments issued by non-financial institutions 2 (“non-financial debt financing instruments” for short). By the size of bond holdings, the top 50 investors, mainly including public funds, large state-owned commercial banks (proprietary) and securities companies (asset management) held 51.5 percent of the total, and the top 200 investors held 81.6 percent. The biggest, smallest, average, and median numbers of holders for a non-financial debt financing instrument were 69, 1, 12, and 11, respectively, while 90 percent of non-financial debt financing instruments were held by fewer than 20 investors.

In March, based on the trading volume of non-financial debt-financing instruments by incorporated institutions, the top 50 investors conducted 64.9 percent of such transactions, mainly including securities companies (proprietary), joint stock commercial banks (proprietary) and fund companies (proprietary). Transactions by the top 200 investors accounted for 91.1 percent.

(Sources: China Securities Regulatory Commission, China Central Depository & Clearing Co., Ltd., National Interbank Funding Center, Shanghai Clearing House, Shanghai Commercial Paper Exchange, Shanghai Stock Exchange, Shenzhen Stock Exchange, and Beijing Financial Assets Exchange