China Banks:Resumptionof reserve repo reduces chance for RRR cut in near term

类型：行业研究机构：招商证券(香港)有限公司研究员：Donger WANGD,Sean CHENG 日期：2015-06-29

PBOC injected RMB35bn liquidity into the market via reverse repo today, after suspension of nine weeks in a row. 。

    We judge PBOC is taking this action to smoothen liquidity around end of mid-year, given consistently rising SHIBOR for all tenors this week.

    We believe this likely reduces the chance for further RRR cut in the very near term, although we continue to see loosening monetary policy in the rest of this year.

    Resumption of reverse repo after 9-week suspension

    PBOC conducted RMB35bn reverse repo with a lower interest rate of 2.70% p.a. today. We believe the central bank aims to inject liquidity via short-term open market operations to smoothen the liquidity around the end of mid-year given the rising SHIBOR for all tenors as well as interest rate for 7 days repo since the beginning of this week.

    Meanwhile, PBOC further reduced the interest rate of reverse repo by 65bps to 2.70% p.a., in the purpose of directing market interest rate to a lower level in order to relieve financing cost for enterprises.

    Lowerchance for RRR cut in very near term, but loosening should continue throughout this year

    In our view, the resumption of reverse repo today reduces the possibility of an imminent RRR as PBOC is likely to wait and see the impact from last round of 100bps RRR cut on 20 April 2015. That said, we maintain our view that monetary policy should remain accommodative throughout the year as the risks still skew towards the downside for real economy. Our macroeconomics team continues to project 25bps rate cut in the rest of year.

    Catalystsand Valuation

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