Domestic money market maintains a dynamic balance (2)

There are still uncertainties

In December, banks issue large volume of subordinated debts, and commercial banks are making vigorous efforts to solicit deposit so as to cope with the end-of-year assessment. This kind of uncertainties will further affect the capital surface of the market and tighten capital supply in the market.

According to statistics, in the last 7 weeks of 2012, a number of domestic banks may issue about RMB 150 billion Yuan of subordinated debt for refinancing. This amount greatly exceeds the total issuance of RMB 60 billion Yuan in the first 10 months.

In the short term, the outburst of commercial bank deposit at the end of the year will disrupt the current market capital surface. In December, banks all introduce high-interest short-term financial products, with estimated annualized return 0.1 percentage point higher than previous financial products, most of them higher than 4.50 percent. High return will be more attractive to investors given the sluggish stock market, and this will inevitably brings pressure to the currency market.

Besides, from the perspective of the macro economy, some of the macro economy statistics are promising, and the economy is very likely to remain stable in the short term. According to latest statistics, from January to November this year, above-scale industrial added value across the country increased by 10.0 percent year on year; in November, above-scale industrial added value increased by 10.1 percent year on year, and by 0.86 percent month on month. In the first 11 months of this year, China's consumer price index increased by 2.7 percent year on year; CPI in November rebounded gently, up 2.0 percent year on year.

In the meantime, producer price index in November decreased by 2.2 percent year on year, and by 0.1 percent month on month, extending the negative growth in the previous 9 months, somewhat indicating the existence of pressure for the recovery of the economy. Generally speaking, the change of the fundamentals of the macro economy will be influencing factors of market fluidity in December or even in the early period of next year.