1. Bond Issuance

In January, the bond market saw a total issuance of RMB5.30941 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 RMB750.00 billion, RMB384.45 billion, RMB598.40 billion, RMB1.27059 trillion, RMB5.21 billion, and RMB2.28546 trillion, respectively.

As of end-January, outstanding bonds held in custody amounted to RMB159.3 trillion, including RMB138.3 trillion in the interbank bond market and RMB21.0 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 RMB29.4 trillion, RMB40.8 trillion, RMB38.1 trillion, RMB32.3 trillion, RMB1.8 trillion and RMB15.7 trillion, respectively. Commercial bank over-the-counter (OTC) bonds in custody recorded an outstanding amount of RMB63.55 billion.

2. Bond Market

In January, the turnover of cash bond trading in the interbank bond market saw a year-on-year increase of 71.6 percent (a month-on-month increase of 13.3 percent) to RMB33.5 trillion, with the daily average standing at RMB1.52185 trillion. Of the total turnover, transactions with each trade between RMB5 million and RMB50 million accounted for 48.6 percent, while those with each trade above RMB90 million made up 44.8 percent. The average value per trade was RMB45.819 million. The turnover of cash bond trading in the stock exchange bond market was RMB3.9 trillion, averaging RMB176.88 billion daily. A total of 87,000 transactions were done in the commercial bank OTC bond market, with the total turnover of RMB30.93 billion.

3. Bond Market Opening-Up

As of end-January 2024, overseas institutions held RMB3.92 trillion, or 2.5 percent of the outstanding bonds in custody in China’s bond market. Specifically, their holdings in the interbank bond market amounted to RMB3.87 trillion. By bond type, overseas institutions held RMB2.33 trillion of treasury bonds, or 60.2 percent of their bond holdings in the interbank bond market, and RMB0.84 trillion of policy financial bonds, or 21.7 percent of their bond holdings in the interbank bond market.

4. Money Market

In January, interbank money market transactions increased by 65.9 percent year on year (a month-on-month increase of 14.3 percent) to RMB178.0 trillion. Specifically, pledged repo transactions rose by 72.0 percent year on year (a month-on-month increase of 16.1 percent) to RMB166.6 trillion; outright repo transactions went up by 118.7 percent year on year (a month-on-month increase of 36.0 percent) to RMB622.10 billion; and interbank lending transactions increased by 6.4 percent year on year (a month-on-month decrease of 8.3 percent) to RMB10.9 trillion. Repo transactions of exchange-traded standardized bonds went up by 47.9 percent year on year (a month-on-month increase of 11.8 percent) to RMB45.2 trillion.

In January, the monthly weighted average interest rate on pledged repos stood at 1.90 percent, down by 1 bp from a month earlier, while the monthly weighted average interest rate on interbank lending was 1.83 percent, up by 5 bps from a month earlier.

5. Bill Market

In January, commercial drafts that were accepted totaled RMB2.7 trillion while those discounted amounted to RMB1.8 trillion. As of end-January, the outstanding amount of accepted commercial drafts stood at RMB18.1 trillion, and those discounted registered RMB12.

In January, 100,000 micro, small, and medium-sized enterprises (MSMEs) issued bills, accounting for 92.3 percent of all issuing enterprises. Bills issued by MSMEs reached RMB1.8 trillion, representing 67.0 percent of the total issuance. Of all the enterprises that discounted bills, 90,000 (96.2 percent) were MSMEs. The bills they discounted registered RMB1.4 trillion, accounting for 76.8 percent of the total amount of discounted bills.

6. Stock Market

At end-January, the Shanghai Composite Index closed at 2788.6 points, decreasing by 186.4 points (6.3 percent) from a month earlier. The Shenzhen Component Index closed at 8212.8 points, decreasing by 1311.9 points (13.8 percent) from a month earlier. In January, the average daily turnover on the Shanghai Stock Exchange increased by 0.1 percent month on month to RMB330.05 billion and that on the Shenzhen Stock Exchange decreased by 9.5 percent month on month to RMB398.04 billion.

7. Structure of Bond Holders in the Interbank Bond Market

As of end-January, there were 4,020 incorporated institutions in the interbank market, all of which were financial institutions. Of the incorporated institutions, 2,141 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 (asset management), large state-owned commercial banks (proprietary), and joint stock commercial banks (proprietary), held 50.6 percent of the total, and the top 200 investors held 82.3 percent. The biggest, smallest, average, and median numbers of holders for a non-financial debt financing instrument were 54, 1, 13 and 12, respectively, while 88 percent of non-financial debt financing instruments were held by fewer than 20 investors.

In January, based on the trading volume of non-financial debt-financing instruments by incorporated institutions, the top 50 investors conducted 62.8 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 90.5 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)