China's Key Money Rate Reaches 11 Month-High After IPOs Enter Lock-up

MOSCOW, December 18 (Sputnik) — The seven-day repurchase rate at the Shanghai Stock Exchange experienced its highest increase in approximately 11 months as initial public offering (IPO) share sales enter the lock-up period, Bloomberg reported Thursday.

The seven-day repurchase rate, an index of funding availability agreed between Chinese banks, mounted by 110 basis points, rising to 4.98 percent, the highest gauge since January 20, the weighted average data of the National Interbank Funding Center in China showed.

"The IPOs are affecting the market, leading to cautious sentiment with fewer institutions willing to lend," Li Haitao, a Shanghai-based analyst at China Guangfa Bank Co. was quoted as saying by Bloomberg. "Quite a few traders found it very difficult to meet their funding needs yesterday," he added.

Twelve available public offerings are likely to get about $483 billion of orders from the investors in the period from December 18 to 25, Bloomberg said, citing Shenyin & Wanguo Securities estimates.

Earlier this week, the People's Bank of China abstained from participation in open-market operations. Its neutral position contributed to the rise in the Shanghai money rate.

Generally, banks experience pressure on liquidity for a relatively short-term period in the year-end due to a necessary accumulation of funds to pay taxes, offset balance sheets and meet market regulatory criteria.