2011 Financial Market Performance released by the People’s Bank of China on 2011-01-31 shows that the bond market issued 7.8 trillion yuan of denominated bonds in 2011, decreasing by 20.4% year-on-year.
Compared with the previous year, the issue volume of government bonds and central bank bills decreased, while the issue volume of policy bank bonds, financial bonds and company credit bonds increased. By the end of 2011, the total bond custody amount of the bond market reached 22.1 trillion yuan, of which the bond custody amount of the interbank market was 21.4 trillion yuan, accounting for 97.1%.
The total issuance volume of bonds decreased. In 2011, the bonds issued by the Ministry of Finance were 1.7 trillion yuan (including local treasury bonds of 200 billion yuan); the issued central bank bills were 1.4 trillion yuan; the bonds issued by China Development Bank, Export-Import Bank of China and Agricultural Development Bank of China was 2.0 trillion yuan; the issued financial bonds were 352.9 billion yuan. In 2011, the company credit bonds developed continuously with credit level further enriched and financial structure constantly optimized. The company credit bonds of 2.2 trillion yuan were issued in the bond market, increasing by 38.8% year-on-year. Among the company credit bonds, super & short-term commercial paper took up 224 billion yuan, short-term commercial paper 802.9 billion yuan, medium term note 727 billion yuan, small and medium enterprise collection note 5.2 billion yuan, non-public targeted debt financing instrument 89.9 billion yuan, enterprise bonds 247.3 billion yuan and corporate bonds 124.1 billion yuan.
At present, the bond issuers of the interbank bond market include various market participants, such as the Ministry of Finance, policy banks, the Ministry of Railways, commercial banks, nonbank financial institutions, international development institutions, non-financial enterprises and so on. The bond type is gradually diversified and the credit level is further enriched.
In 2011, the bond period was mainly medium term and short -term. The issued bonds with the bond period within 5 years took up 52.9%, increasing by 12.9% over 2010; the issued bonds with the bond period from 5 years (including) to 10 years took up 29.8%, decreasing by 4.9% over 2010; the issued bonds with the bond period over 10 years (including) took up 17.3%, decreasing by 8% over 2010.
The market volume increased year-on-year and the bond index rose in general. In 2011, the accumulative trading volume of the interbank market was 196.5 trillion yuan, increasing by 9.5% year-on-year. The accumulative volume of interbank lending was 33.4 trillion yuan, increasing by 20.0% year-on-year; the accumulative volume of bond repurchase was 99.5 trillion yuan, increasing by 13.6%; the accumulative volume of bond trading was 63.6 trillion yuan, decreasing by 0.6% year-on-year.
In 2011, the bond index rose in general. Throughout the whole year, the bond index of the interbank market increased from 132.93 points at the beginning of the year to 139.75 points at the end of the year, increasing by 6.82 points (5.1%) year-on-year; the bond index of exchange market increased from 126.32 points at the beginning of the year to 131.39 points at the end of the year, increasing by 5.07 points (4.0%).
The volatility of the money market rate increased and the periodic changes of the yield curve were significant. The volatility of the money market rate was large in 2011. On 2011-03-15, 7-day repo weighted rate reached 1.99% which was the lowest within the year; on 2011-06-23, 7-day repo weighted rate reached 9.04% which was the highest within the year. Throughout 2011, the weighted average interbank rate in December was 3.33%, decreasing by 37 base points over January; the pledged repo weighted average rate in December was 3.37%, decreasing by 92 base points over January.
In 2011, the bond yield curve of the interbank market took on sharply downward trend. At the end of December, the yield level of 1-year, 5-year, 10-year, 20-year and 30-year bonds decreased by 44, 57, 60, 32 and 26 base points respectively over the end of January. The trend could be divided into three phases: the first phase was the first four months, at which the bond yield curve sharply moved down; the second phase was from the beginning of May to the end of August, at which the bond yield curve evenly moved up; the third phase was from the beginning of September to the end of December, at which the bond yield curve sharply moved down again.
The type of investor was more diversified. As of the end of 2011, there were 11162 participant organizations in the interbank market, increasing by 927 over the end of 2010, including various financial institution and non financial institution investors, which formed the multilayer investor structure with the market marker as the core, the financial institutions as the subject and other institutional investors as the collaborators. The interbank market has become the important platform for investing and financing activities of various market participants.
In 2011, the interbank market investors were further enriched with the collection investors largely increased and the investment on interbank bond market of qualified foreign institutional investors steadily propelled. Up to the end of 2011, 51 qualified foreign institutional investors were approved to enter the interbank bond market.
The over-the-counter trading volume of commercial banks decreased and the account opening volume steadily increased. In 2011, the over-the-counter trading of commercial banks was stable. Commercial banks newly increased 20 over-the-counter book-entry treasure bonds, including five 1-year bonds, three 3-year bonds, three 5-year bonds, four 7-year bonds and five 10-year bonds. By the end of 2011, there were six types of over-the-counter government bonds, including 1-year bonds, 3-year bonds, 5-year bonds, 7-year bonds, 10-year bonds and 15-year bonds. The amount of over-the-counter government bonds reached 95. The trading volume of over-the-counter book-entry treasure bonds issued by commercial banks was 2.79 billion yuan, decreasing by 33.1% over 2010. By the end of December 2011, the account opening volume of over-the-counter book-entry treasure bonds in commercial banks reached 100.3 billion, increasing by 1.07 million (11.9%).
The trading of derivative products kept stable in general. In 2011, 436 bond forwarding transactions were concluded with the amount of 103 billion yuan, decreasing by 67.7%. From the underlying bonds, the bond forwarding trading took policy financial bonds as the major, taking up 63.5% of the total amount. In the view of period, the trading volume of 2~7-day bonds took the highest proportion, amounting to 62.1%.
In 2011, 20,000 transactions were concluded in RMB interest swap market with the total notional amount of 2.7 trillion yuan, increasing by 80% over 2010. In the view of period, the 1-year type and shorter type were most active with the total notional amount of 2.0 trillion yuan, amounting to 74.7%. In the view of reference rate, the flexible reference rate of RMB interest swap trade in 2011 included 7-day fixing repo rate, Shibor and 1-year deposit rate and the associated notional amount of interest swap trade took up 51.5%, 45.5% and 2.9% respectively. The swap trade with Shibor as the flexible reference rate obviously increased.
The forward rate agreement in 2011 was lukewarm. Only 3 transactions were concluded with the total notional amount of 0.3 billion yuan.
The stock index moved down in general and the trading volume decreased. In 2011, the stock index moved down in general. At the end of 2011, Shanghai Stock Index closed at 2199.42 points, decreasing by 608.66 points (27.7%) from 2808.08 points over the end of 2011. In 2011, the highest was 3057.33 points and the lowest was 2166.21 points with the volatility of 891.12 points.
The trading volume of the stock market obviously decreased. With the A-share market as the example, the accumulative trading volume throughout 2011 was 23.9 trillion yuan and the daily trading volume was 97.85 billion yuan, decreasing by 21.9% over 2010.
(Source: http://money.163.com/12/0131/20/7P4F4O6V00253B0H.html; translated by Tu Jiabao; proofread by Sara.)
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