China's CFFEX sets base prices for new govt bond futures
SHANGHAI, Sept 5
SHANGHAI, Sept 5 (Reuters) - The China Financial Futures Exchange (CFFEX) has set base prices for three five-year government bond futures contracts <0#CTF:>, which will begin trading on Friday when China's government bond futures market reopens after being shuttered for 18 years.
The base price for the December 2013 contract was set at 94.168 yuan ($15.39), the March 2013 contract at 94.188 yuan, and the June 2014 contract at 94.218 yuan, CFFEX said in a statement on its website on Thursday.
"The prices are reasonable," said Liu Wenbo, a specialised analyst at Shanghai CIFCO Futures Co.
"Prices for active five-year spot government bonds have largely traded around 94 yuan recently, but as the sentiment toward the spot market is currently relatively bearish, prices for the five-year futures contracts may have some room to fall tomorrow."
Exchange rules state that daily limits for the first day of trading will be 4 percent in either direction, a provision that analysts say reflects an intention to let the market discover its own prices. The daily limit will drop to 2 percent up or down from the second day onwards, the regulations said.
Beijing is moving to use financial innovation to drive growth while reducing systemic risk from sloppy lending practices, and the reintroduction of a government bond futures market -- closed since 1995 after a trading scandal -- is part of that drive.
Analysts have said futures trade is set to stage a slow restart, with market enthusiasm crimped by tight risk controls and a moderate inflationary environment.
For the CFFEX statement, click on www.cffex.com.cn.
($1 = 6.1201 Chinese yuan) (Reporting by Lu Jianxin and Pete Sweeney; Editing by Jacqueline Wong)
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