Asian Fixed Income/Frontier Market Research

Bondcritic

Bondcritic, established in 2009, is designed to be an independent credit research voice that helps investors gain insights and unbiased analyses on Asian fixed income market. Our mission is to discover deep-value Asian high-yield and distressed bonds with a bottom-up approach, together with the help of our proprietary ESG (Environmental, Social Development, and Governance) model. At the same time, we focus on bringing investment cases of unrated and unloved issuers to the general public.

China Economist

Kerry Liu

Macroeconomics

<ul>
<li>The People’s Bank of China (PBOC) has begun discussing the importance of DR007 (i.e. the 7-day repurchase rate pledged by interest rate bonds by deposit-taking institutions at Chinese interbank market) since Q3 2016.</li>
<li>We expect Fixed DR007 (FDR007) to become PBOC’s new policy rate while there has not been a serious study on this new rate. Investors should pay more attention to this new interbank rate as it has started well to become PBOC’s new policy rate.</li>
<li>The change of the levels of PBOC’s open market operations rather than the levels has a significant effect on the level of FR007. Liquidity injection (withdraw) from open market operations can decrease (increase) the volatility of FDR007, and the effect of open market operations on the volatility of FR007 is insignificant, in our view.</li>
</ul>


The People’s Bank of China (PBOC) has begun discussing the importance of DR007 (i.e. the 7-day repurchase rate pledged by interest rate bonds by deposit-taking institutions at Chinese interbank market) since Q3 2016.
We expect Fixed DR007 (FDR007) to become PBOC’s new policy rate while there has not been a serious study on this new rate. Investors should pay more attention to this new interbank rate as it has started well to become PBOC’s new policy rate.
The change of the levels of PBOC’s open market operations rather than the levels has a significant effect on the level of FR007. Liquidity injection (withdraw) from open market operations can decrease (increase) the volatility of FDR007, and the effect of open market operations on the volatility of FR007 is insignificant, in our view.


MSCI AC Asia ex Japan Index (MXASJ INDEX)

China Economics: Unnoticed New Policy Rate Succession on 007