Greater China Banks Daily: Commercial banks injected RMB 857.4bn into bond custody in August; PBOC Chair signals moderately loose monetary policy

Cailian, Sep 22: The bond market continued to expand in August, but the pace of growth decelerated from the previous month. Total custody increased by RMB 1.51trn MoM, which was RMB 750bn less than the growth in July. Among the participants, commercial banks contributed over half of the monthly increase by injecting RMB 857.4bn of net purchases (slightly less than July), favouring rate bonds over credit bonds. Broader funds remained aggressive, adding RMB 484.7bn (RMB 120bn higher than July) in their total position. Meanwhile, oversea institutions and insurance companies reduced their custody size. For bond categories, the rate bonds and credit bonds growth both slowed down, recording net MoM increases of RMB 1.08trn (down RMB 500bn) and RMB 233.9bn (down ~RMB 156bn). NCD custody totalled RMB 19.47trn, with the MoM increase shrinking by RMB 56.4bn to RMB 130.74bn. Overall, the bond market leverage rate dropped by 0.15bps MoM to 105.28%. PBOC Chair signals moderately loose monetary poli