skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

Supply remains a concern in Q4 (chart 1). With reference to the central government's financing plan for the year, we expect supply of CGBs to remain huge in the rest of the year. Year-to-date the net CGB financing proceeds reached CNY2473bn, with the remaining CNY1307bn for Q4, which accounts for as much as 35% of the full-year net financing target.


China Insight 1001  


With bond supply remaining plentiful and PBOC continuing to be reluctant to release more liquidity, we expect financial institutions will keep fighting hard for funding. Against this backdrop, NCD yield will continue to be elevated (chart 2), as a result limiting the downside room for interbank money rates.


China Insight 1001   


As far as the interbank liquidity is concerned, historically seasonals favour funding pressure elevation in the second half of Oct. Since 2010 (inclusive), we have seen funding pressure elevation in the second half of Oct in six years.

Given the above factors, we expect the banking system liquidity will remain structurally tight in Q4 (chart 3). Though PBOC should be willing to conduct medium-term lending facility (MLF) renewals over the rest of the year, we doubt it has intention to reduce reserve requirement ratio (RRR) much further.


China Insight 1001 

For more insight subscribe here

Any questions? Speak to a specialist

Would you like to request sample data or analysis from Informa Financial Intelligence? 

See how our tailored solutions can help you gain a competitive advantage: