The Bank Of China Issued A Debt Closing &Nbsp, And The Market Funds Gradually Returned To Prosperity.

Today, the central bank will tender 110 billion yuan 3 year central bank ticket and 5 billion yuan 3 month central bank votes, and hedge funds of 144 billion yuan. With the end of all the purchase of Bank of China convertible bonds, market funds will gradually return to a more comfortable situation.

After nearly two weeks of tight liquidity test, the market yesterday ushered in a more relaxed fund situation. Although the Shanghai interbank offered rate (Shibor) rose all the way yesterday, the rate has been greatly reduced. Shibor rose by 2.46bp and 7.88bp respectively during the overnight and 7 days before the increase. Traders expected to return to the net with the weakening of the operation of the central bank's open market in the late stage, and the liquidity dilemma will be temporarily alleviated.

Whether the future market funds can be ample depends on whether the balance between supply and demand can be maintained. In fact, this sudden liquidity strain is not only related to the cumulative effect caused by the continuous issuance of the 3 year central bank's votes and the increase in the reserve ratio, but also directly affected by the "pumping" of the 40 billion yuan convertible bonds issued by the Bank of China. According to the agency estimates, the winning rate of the bank's convertible bonds is around 2%, and the frozen funds will be as high as 20000 billion yuan by 40 billion. Even if a 20% deposit is issued under the net issuing rules, the actual liquidity of the frozen institutions will be around 400 billion yuan. This undoubtedly has a huge impact on the short-term liquidity of the market.

This is also evident from Tuesday's pledge repo rate, which has surged to nearly 19 months high. In order to raise the "new capital" on Wednesday, the organization had to get a high price in the interbank market. And yesterday, when all the purchase of the Bank of China's convertible bonds ended, the demand disappeared.

Money market traders also told reporters that because the above frozen funds could be thawed on next Monday and Tuesday, Bank of China had the right to make profits in the short-term borrowing and buyback market, which also reversed the recent "no money" Dilemma and made the market capital supply a virtuous circle.

The central bank's investment in the open market is the fundamental way to solve the recent liquidity contradictions. Due to the issuance of the 3 - year central bank votes every other week, the maturity of the whole June is as high as 779 billion yuan. Therefore, the market generally expects that if the central bank maintains a small net investment, the capital market will gradually return to a more comfortable position this month, which will be a good benefit to the investment market including the bond market.

In addition, the number of foreign exchange accounts has become the main factor affecting external liquidity injection. Song Qichao, an analyst with the first venture securities, told reporters that China's foreign exchange holdings in May will be significantly reduced by the weakening of the RMB appreciation expectation and the unclear external market environment, and even the subsequent months will not have a big rise. This will have a certain constraint on the market funds.

A number of market participants also told reporters that if the Agricultural Bank IPO, which is most concerned about the industry, will make its debut in the latter part of this month, the capital front will show a trend of loosening and tightening in June. However, some of the pedestrians believe that the market has already prepared for the IPO of the Agricultural Bank of China, and has recently reduced the operation of some capital leverages. Therefore, even if the fund-raising begins in late June, the market will not be affected too much.