1. Bond Issuance

In August, total bond issuance registered RMB6.62558 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 RMB922.42 billion, RMB1.30894 trillion, RMB919.47 billion, RMB1.44536 trillion, RMB33.17 billion, and RMB1.96322 trillion, respectively.

As of end-August, outstanding bonds held in custody amounted to RMB152.8 trillion, including RMB132.5 trillion in the interbank bond market and RMB20.3 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 RMB26.7 trillion, RMB38.5 trillion, RMB37.0 trillion, RMB32.4 trillion, RMB2.2 trillion and RMB14.6 trillion, respectively. Commercial bank over-the-counter (OTC) bonds in custody recorded an outstanding amount of RMB47.91 billion.

2. Bond Market

In August, the turnover of cash bond trading in the interbank bond market saw a year-on-year increase of 8.4 percent (a month-on-month increase of 2.2 percent) to RMB30.6 trillion, with the daily average standing at RMB1.33162 trillion. Of the total turnover, transactions with each trade between RMB5 million and RMB50 million accounted for 48.5 percent while those with each trade above RMB90 million made up 44.7 percent. The average value per trade was RMB45.505 million. The turnover of cash bond trading in the stock exchange bond market was RMB5.7 trillion, averaging RMB248.34 billion daily. A total of 79,000 transactions were done in the commercial bank OTC bond market, with the total turnover of RMB14.73 billion.

3. Bond Market Opening-up

As of end-August 2023, overseas institutions held RMB3.24 trillion, or 2.1 percent of the outstanding bonds in custody in China’s bond market. Specifically, their holdings in the interbank bond market amounted to RMB3.18 trillion. By bond type, overseas institutions held RMB2.08 trillion of treasury bonds, or 65.6 percent of their bond holdings in the interbank bond market, and RMB0.69 trillion of policy financial bonds, or 21.8 percent of their bond holdings in the interbank bond market.

4. Money Market

In August, interbank money market transactions increased by 7.9 percent year on year (a month-on-month increase of 0.7 percent) to RMB183.4 trillion. Specifically, pledged repo transactions rose by 11.7 percent year on year (a month-on-month increase of 1.6 percent) to RMB169.9 trillion; outright repo transactions went down by 7.3 percent year on year (a month-on-month decrease of 8.4 percent) to RMB462.35 billion; and interbank lending transactions decreased by 24.9 percent year on year (a month-on-month decrease of 10.0 percent) to RMB13.1 trillion. Repo transactions of exchange-traded standardized bonds went up by 10.0 percent year on year (a month-on-month increase of 3.2 percent) to RMB40.7 trillion.

In August, the monthly weighted average interest rate on pledged repos stood at 1.76 percent, up by 22 bps from a month earlier, while the monthly weighted average interest rate on interbank lending was 1.71 percent, up by 23 bps from a month earlier.

5. Bill Market

In August, commercial drafts that were accepted totaled RMB3.0 trillion while those discounted amounted to RMB2.3 trillion. As of end-August, the outstanding amount of accepted commercial drafts stood at RMB18.2 trillion, and those discounted registered RMB12.8 trillion.

In August, 104,000 micro, small, and medium-sized enterprises (MSMEs) issued bills, accounting for 91.8 percent of all issuing enterprises. Bills issued by MSMEs reached RMB2.1 trillion, representing 69.1 percent of the total issuance. Of all the enterprises that discounted bills, 103,000 (96.3 percent) were MSMEs. The bills they discounted registered RMB1.8 trillion, accounting for 77.3 percent of the total amount of discounted bills.

6. Stock Market

At end-August, the Shanghai Composite Index closed at 3119.9 points, decreasing by 171.2 points (5.2 percent) from a month earlier. The Shenzhen Component Index closed at 10418.2 points, decreasing by 765.7 points (6.8 percent) from a month earlier. In August, the average daily turnover on the Shanghai Stock Exchange increased by 3.9 percent month on month to RMB362.84 billion and that on the Shenzhen Stock Exchange decreased by 7.3 percent month on month to RMB462.36 billion.

7. Structure of Bond Holders in the Interbank Bond Market

As of end-August, there were 4,021 incorporated institutions in the interbank market, all of which were financial institutions. Of the incorporated institutions, 2,193 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 joint stock banks (agent), held 49.9 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 63, 1, 12, and 12, respectively, while 89 percent of non-financial debt financing instruments were held by fewer than 20 investors.

In August, based on the trading volume of non-financial debt-financing instruments by incorporated institutions, the top 50 investors conducted 62.6 percent of such transactions, mainly including securities companies (proprietary), fund companies (proprietary) and wealth management subsidiary companies (proprietary). Transactions by the top 200 investors accounted for 90.1 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)