HONG KONG (Nov 21): The People’s Bank of China is offering 50 billion yuan (US$8.17 billion) of short-term funds to ease a shortage of cash in the financial system, according to a Market News International report.

The PBOC is using Short-term Liquidity Operations to inject the funds, the report said, citing three people it didn’t identify.

Australia & New Zealand Banking Group estimates that the initial public offerings will lock up at least one trillion yuan, while Guotai Junan Securities put the figure at 1.6 trillion yuan.

Eleven companies are due to sell shares for the first time, seven of them on Monday. Two phone calls to the PBOC’s press office went unanswered.

The seven-day repurchase rate, a gauge of funding availability in the banking system, rose as much as 222 basis points, or 2.22 percentage point, to an eight-week high of 5.50 percent, according to data from the National Interbank Funding Centre.

A weighted average increased 15 basis points to 3.43 percent as of 1:08pm in Shanghai, set for the biggest advance since September.

China stocks extended gains, with the Shanghai Composite Index advancing 0.7 percent.

“The PBOC clearly has the capacity to bring down money-market rates,” said Suan Teck Kin, an economist at United Overseas Bank in Singapore.

“But right now, I don’t see the short-term rates coming off significantly as demand for cash is strong in relation to IPOs.”

Trading extension
Trading in the money market was extended by 30 minutes to 5pm yesterday, according to a press officer at the National Interbank Funding Centre, who asked not to be named citing agency rules.

The person didn’t give any reason for the extension.

Nanjing Port Co cancelled a sale of 200 million yuan of 270-day notes yesterday, citing market volatility.

The PBOC said in January 2013 that it would use SLOs as an extra tool to manage the cash supply, adding that these would mainly involve the use of repurchase agreements and reverse repos with maturities of fewer than seven days.

It named 12 banks, including Industrial & Commercial Bank of China and Bank of China, as participants in the operations, which supplement regular open-market auctions held each Tuesday and Thursday.

The PBOC delays reporting its use of SLOs by at least a month and the last such announcement was on March 31 and made in respect of operations conducted on Feb 27.