China’s benchmark money-market rate fell the most in six months after the securities regulator suspended new share sales amid a market rout.
There will be no initial public offerings in the near future, while the number and value of IPOs will be significantly reduced going forward, China Securities Regulatory Commission spokesman Deng Ge said on Sunday. The central bank gauged demand for seven-day reverse-repurchase agreements this week, according to a trader at a primary dealer required to bid at the auctions on Monday. It injected a net 50 billion yuan ($8.1 billion) through reverse repos last week.
The seven-day repo rate, a gauge of interbank funding availability, fell 25 basis points to 2.58 percent as of 4:27 p.m. in Shanghai, according to a weighted average from the National Interbank Funding Center. That’s the biggest one-day drop since Jan. 6.
“The suspension of IPOs will directly ease money-market liquidity,” said Frances Cheung, head of rates strategy for Asia ex-Japan at Societe Generale SA. “The recent actions, including open-market operations and policy-rate and reserve-ratio cuts, reinforce our view that liquidity will be provided if needed.”
The People’s Bank of China lowered benchmark interest rates for the fourth time since November on June 27 and cut some lenders’ reserve ratios.
The central bank will offer funding support to China Securities Finance Corp., which manages the nation’s short selling and margin trading, according to a statement on the CSRC website. The Shanghai Composite Index rallied 2.4 percent on Monday after plunging 32 percent in the previous three weeks.
The yield on government bonds due April 2025 fell nine basis points, the most since April 20, to 3.5 percent, according to National Interbank Funding Center prices. The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, declined four basis points to 2.41 percent, data compiled by Bloomberg show.