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China bond indexes steady after MLF boost

The ATF index gauges were stable on Monday, as the People’s Bank of China (PBoC) injected 200 billion ($28 billion) into the market via its medium-term lending facility (MLF).

The MLF, which will mature in one year at an interest rate of 2.95%, is a tool that was introduced in 2014 to help commercial and policy banks maintain liquidity by allowing them to borrow from the central bank using securities as collateral. 

The move is in addition to the PBoC’s seven reverse repo open market operations since June 3 totalling 650 billion yuan ($92 billion) in a bid to stabilise liquidity.

The China Bond 50 Index, the flagship index, above, gained 0.03% and closed at 107.09.

The ATF ALLINDEX Local Governments, above, also closed in positive territory, gaining 0.02%.

Meanwhile, the ATF ALLINDEX Enterprise gauge, seen above, retreated 0.11%.

Among Enterprise index constituents, Datong Coal Mine Group bonds lost 6.43% to close at 103.89, which substantially dragged down the index.

Meanwhile, the ATF ALLINDEX Corporates gauge, seen here, retreated 0.02%.

And the ATF ALLINDEX Financial gauge, seen here, closed flat at 106.84.

China is tipped to make a muted recovery in 2020, with real GDP expected to grow by 2%, according to a DBS research report. This is in contrast to the US, where the economy is expected to contract. 

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