1. Bond Issuance

In May, the bond market saw a total issuance of RMB6.86249 trillion.

The issuance of treasury bonds, local government bonds, financial bonds, corporate credit bonds, credit-asset-backed securities, and interbank certificates of deposit (CDs) reached RMB971.38 billion, RMB903.59 billion, RMB1.01485 trillion, RMB749.38 billion, RMB36.68 billion, and RMB3.15181 trillion, respectively.

As of end-May, outstanding bonds held in custody amounted to RMB163.5 trillion, including RMB142.9 trillion in the interbank bond market and RMB20.6 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 RMB30.4 trillion, RMB42.0 trillion, RMB39.1 trillion, RMB32.3 trillion, RMB1.4 trillion, and RMB17.1 trillion, respectively. Commercial bank over-the-counter (OTC) bonds in custody recorded an outstanding amount of RMB73.94 billion.

2. Bond Market

In May, the turnover of cash bond trading in the interbank bond market saw a year-on-year increase of 23.5 percent (a month-on-month decrease of 6.0 percent) to RMB32.3 trillion, with the daily average standing at RMB1.53902 trillion. Of the total turnover, transactions with each trade between RMB5 million and RMB50 million accounted for 49.6 percent, while those with each trade above RMB90 million made up 44.2 percent. The average value per trade was RMB43.471 million. The turnover of cash bond trading in the stock exchange bond market was RMB3.6 trillion, averaging RMB178.78 billion daily. A total of 105,000 transactions were done in the commercial bank OTC bond market, with the total turnover of RMB31.98 billion.

3. Bond Market Opening-up

As of end-May 2024, overseas institutions held RMB4.27 trillion, or 2.6 percent of the outstanding bonds in custody in China’s bond market. Specifically, their holdings in the interbank bond market amounted to RMB4.22 trillion. By bond type, overseas institutions held RMB2.24 trillion of treasury bonds, or 53.1 percent of their bond holdings in the interbank bond market, and RMB0.93 trillion of policy financial bonds, or 22.0 percent of their bond holdings in the interbank bond market.

4. Money Market

In May, interbank money market transactions decreased by 24.8 percent year on year (a month-on-month decrease of 13.1 percent) to RMB128.5 trillion. Specifically, pledged repo transactions declined by 22.8 percent year on year (a month-on-month decrease of 13.2 percent) to RMB119.7 trillion; outright repo transactions went up by 38.1 percent year on year (a month-on-month decrease of 0.3 percent) to RMB709.62 billion; and interbank lending transactions decreased by 46.6 percent year on year (a month-on-month decrease of 13.0 percent) to RMB8.1 trillion. Repo transactions of exchange-traded standardized bonds went up by 2.9 percent year on year (a month-on-month decrease of 0.4 percent) to RMB39.0 trillion.

In May, the monthly weighted average interest rate on pledged repos stood at 1.82 percent, down by 4 bps from a month earlier, while the monthly weighted average interest rate on interbank lending was 1.85 percent, down by 2 bps from a month earlier.

5. Bill Market

In May, commercial drafts that were accepted totaled RMB3.6 trillion while those discounted amounted to RMB3.0 trillion. As of end-May, the outstanding amount of accepted commercial drafts stood at RMB18.1 trillion, and those discounted registered RMB13.0 trillion.

In May, 101,000 micro, small, and medium-sized enterprises (MSMEs) issued bills, accounting for 93.0 percent of all issuing enterprises. Bills issued by MSMEs reached RMB2.7 trillion, representing 73.9 percent of the total issuance. Of all the enterprises that discounted bills, 107,000 (96.5 percent) were MSMEs. The bills they discounted registered RMB2.4 trillion, accounting for 78.1 percent of the total amount of discounted bills.

6. Stock Market

At end-May, the Shanghai Composite Index closed at 3086.8 points, decreasing by 18.0 points (0.6 percent) from a month earlier. The Shenzhen Component Index closed at 9364.4 points, decreasing by 222.8 points (2.3 percent) from a month earlier. In May, the average daily turnover on the Shanghai Stock Exchange decreased by 8.5 percent month on month to RMB372.13 billion and that on the Shenzhen Stock Exchange decreased by 6.6 percent month on month to RMB473.08 billion.

7. Structure of Bond Holders in the Interbank Bond Market

As of end-May, there were 4,001 incorporated institutions in the interbank market, all of which were financial institutions. Of the incorporated institutions, 2,125 were holders of debt-financing instruments issued by non-financial institutions (“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 trust companies (asset management), held 51.2 percent of the total, and the top 200 investors held 83.2 percent. The biggest, smallest, average, and median numbers of holders for a non-financial debt financing instrument were 61, 1, 13, and 13, respectively, while 87 percent of non-financial debt financing instruments were held by fewer than 20 investors.

In May, based on the trading volume of non-financial debt-financing instruments by incorporated institutions, the top 50 investors conducted 63.3 percent of such transactions, mainly including securities companies (proprietary), joint stock commercial banks (proprietary), and joint stock commercial banks (proprietary). Transactions by the top 200 investors accounted for 91.2 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)