China Overnight Money Rate Rises to One-Month High as IPOs Start

  • 28 share sales estimated to lock up 3.4 trillion yuan
  • Central bank injected 100 billion yuan via MLF on Friday

China’s overnight money-market rate climbed to the highest level in a month as a resumption of new share sales boosted demand for cash.

A total of 28 initial public offerings, including 10 this week, will lock up 3.4 trillion yuan ($531 billion) of funds, according to a Bloomberg survey. China’s securities regulator halted share sales in June during a stock-market rout. Starting next year, IPO subscriptions will follow new rules that don’t require investors to deposit funds.

The overnight repurchase rate, a gauge of interbank funding availability, rose one basis point to 1.78 percent in Shanghai, according to the National Interbank Funding Center prices. That’s the highest since Oct. 26. The seven-day repo rate was unchanged at 2.32 percent. The overnight repurchase rate traded on the Shanghai Stock Exchange closed 127 basis points lower at 0.53 percent, after rising to a three-week high of 5.12 percent.

“The IPOs are sending some ripples to the money markets, but overall liquidity is still ample,” said Chen Peng, a fixed-income analyst at Fortune Securities Co. in Shenzhen. “With more new share sales coming before year-end, interest rates on the exchange will see more volatility than in the past couple of months.”

The People’s Bank of China injected 100 billion yuan into 11 financial institutions via its Medium-term Lending Facility on Friday, and cut the interest rate on the six-month loans to 3.25 percent from 3.35 percent. The monetary authority maintained a net neutral position in open-market operations last week.

The yield on government bonds due October 2025 fell three basis points to 3.05 percent, following a six basis point drop last week, data from the National Interbank Funding Center show.

— With assistance by Helen Sun

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