1. Bond Issuance

In July, total bond issuance registered RMB5.74465 trillion. 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 RMB931.88 billion, RMB619.14 billion, RMB835.27 billion, RMB1.13616 trillion, RMB22.27 billion, and RMB2.16074 trillion, respectively.

As of end-July, outstanding bonds held in custody amounted to RMB151.5 trillion, including RMB131.4 trillion in the interbank bond market and RMB20.1 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 RMB26.2 trillion, RMB37.8 trillion, RMB36.8 trillion, RMB32.3 trillion, RMB2.3 trillion and RMB14.8 trillion, respectively. Commercial bank over-the-counter (OTC) bonds in custody recorded an outstanding amount of RMB45.96 billion.

2. Bond Market

In July, the turnover of cash bond trading in the interbank bond market saw a year-on-year increase of 16.3 percent (a month-on-month increase of 1.2 percent) to RMB27.4 trillion, with the daily average standing at RMB1.3034 trillion. Of the total turnover, transactions with each trade between RMB5 million and RMB50 million accounted for 48.2 percent,while those with each trade above RMB90 million made up 45.4 percent. The average value per trade was RMB45.876 million. The turnover of cash bond trading in the stock exchange bond market was RMB4.5 trillion, averaging RMB212.64 billion daily. A total of 88,000 transactions were done in the commercial bank OTC bond market, with the total turnover of RMB13.67 billion.

3. Bond Market Opening-up

As of end-July 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 64.9 percent of their bond holdings in the interbank bond market, and RMB0.7 trillion of policy financial bonds, or 22.1 percent of their bond holdings in the interbank bond market.

4. Money Market

In July, interbank money market transactions increased by 24.4 percent year on year (a month-on-month increase of 7.5 percent) to RMB182.2 trillion. Specifically, pledged repo transactions rose by 27.2 percent year on year (a month-on-month increase of 7.8 percent) to RMB167.2 trillion; outright repo transactions went up by 22.1 percent year on year (a month-on-month decrease of 4.6 percent) to RMB504.76 billion; and interbank lending transactions decreased by 0.9 percent year on year (a month-on-month increase of 4.5 percent) to RMB14.5 trillion. Repo transactions of exchange-traded standardized bonds went up by 20.1 percent year on year (a month-on-month increase of 2.6 percent) to RMB39.5 trillion.

In July, the monthly weighted average interest rate on pledged repos stood at 1.53 percent, down by 14 bps from a month earlier, while the monthly weighted average interest rate on interbank lending was 1.49 percent, down by 8 bps from a month earlier.

5. Bill Market

In July, commercial drafts that were accepted totaled RMB3.0 trillion while those discounted amounted to RMB2.5 trillion. As of end-July, the outstanding amount of accepted commercial drafts stood at RMB17.8 trillion, and those discounted registered RMB12.4 trillion.

In July, 101,000 micro, small, and medium-sized enterprises (MSMEs) issued bills, accounting for 91.5 percent of all issuing enterprises. Bills issued by MSMEs reached RMB2.0 trillion, representing 67.5 percent of the total issuance. Of all the enterprises that discounted bills, 94,000 (96.0 percent) were MSMEs. The bills they discounted registered RMB1.9 trillion, accounting for 74.5 percent of the total amount of discounted bills.

6. Stock Market

At end-July, the Shanghai Composite Index closed at 3291.0 points, increasing by 89 points (2.8 percent) from a month earlier. The Shenzhen Component Index closed at 11183.9 points, increasing by 157.3 points (1.4 percent) from a month earlier. In July, the average daily turnover on the Shanghai Stock Exchange decreased by 10.8 percent month on month to RMB349.21 billion and that on the Shenzhen Stock Exchange decreased by 12.4 percent month on month to RMB498.98 billion.

7. Structure of Bond Holders in the Interbank Bond Market

As of end-July, there were 4,017 incorporated institutions in the interbank market, all of which were financial institutions. Of the incorporated institutions, 2,187 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, trust companies (asset management) and large state-owned commercial banks (proprietary) held 50.5 percent of the total, and the top 200 investors held 81.4 percent. The biggest, smallest, average, and median numbers of holders for a non-financial debt financing instrument were 66 1, 12, and 11, respectively, while 90 percent of non-financial debt financing instruments were held by fewer than 20 investors.

In July, based on the trading volume of non-financial debt-financing instruments by incorporated institutions, the top 50 investors conducted 63.5 percent of such transactions, mainly including securities companies (proprietary), fund companies (proprietary) and joint stock commercial banks (proprietary). Transactions by the top 200 investors accounted for 91.0 percent.