SHANGHAI Jan 20 China's money rates rose on
Monday following a similar rise on Friday, with traders
primarily blaming the resumption of initial public offerings
(IPOs) in January as the immediate factor taking cash out of
Eight Chinese companies said on Monday that they would list
on China's smaller Shenzhen Stock Exchange on Tuesday, the first
listings on the bourse since a 14-month regulatory freeze on
IPOs to support the stock market.
The listings followed last Friday's trading debut of Neway
Valve (Suzhou) Co Ltd on China's main Shanghai Stock
Exchange, which jumped 43.5 percent on the first trading day,
just shy of its daily limit, underscoring pent-up demand that
bodes well for a raft of new issues to come.
The weighted-average benchmark seven-day bond repurchase
agreement rate leapt up over a full percentage
point by midday to 6.4847 percent, up from 5.1688 percent at
The average one-day "overnight" repo also rose
sharply to 4.0680 percent from 2.9850 percent.
The phenomenon comes as little surprise to money dealers,
who had long predicted that the confluence of factors would
conspire to produce another cash crunch by the end of January,
following quickly on the heels of another one in December.
In addition to fundraising by institutional investors for
cash to invest in upcoming new listings, traders blamed a
tighter monetary stance by the central bank and increasing cash
demand for funds during the Chinese new year holiday that will
close financial markets in the first week of February.
While individual IPOs have attracted massive investor
attention, with new listings enjoying large oversubscriptions,
it has been negative for the wider market indexes. And the rise
in rates appeared to add to equity investor concerns on Monday,
with the primary indexes declining around 0.7
percent apiece, with a particular slump on the Shenzhen bourse
where the NASDAQ-style ChiNext index sliding around
1.6 percent by mid-afternoon.
(Additional reporting by Lu Jianxin and Shanghai Newsroom;
Editing by Shri Navaratnam)