Spring Festival Cash Crunch

China's financial system isn't headed for another cash crunch at Spring Festival (31 Jan), but SHIBOR always shoots up around Spring Festival because many migrant workers drain their accounts and move money home. Also, China's still very cash economy sees a surge in spending around the holiday. Long story short, banks that are in financial straits are still having to offer huge interest rate enticements, as we saw in December and earlier cash crunches, to stay liquid.


Minsheng, Merchants Bank, Ping An, and more face financial pressure ahead of Spring Festival
21st Century Business Herald last year is, inter-bank lending rates have begun to fall, to Shibor 1W (Shanghai interbank interest rates one week), for example, the price went from a high point of 23 December whereabouts of 8.8430% to 8 January of 4.126%.

Reflecting the tightness of the interbank funding market prices Although stable, but the expected return rate of short-term bank financing seems to be still high.

In order to understand the recent yield of bank financing, the current statistical period of 3 months and subsisting in the sale of financial products included in the statistical category.

Expected return rate is still "high"

According Flush iFinD data show recent sales and duration of short-term financial products of 775, of which a total of 76 banks 481 financial products, the highest expected annual yield (the expected rate of return) of over 6%, the total number of issued of 62.06%, while the expected yield of 14 financial products more than 7%.

At the same time, the weighted average expected return rate of 775 financial products 5.92%, while the median expected rate of return of 6%, with the former difference 8 BP, which means more income than bank financing weighted average yield, showing that the recent short-term bank financing is still high rate of return, or it means that the funding tensions between the banks did not get along with greater ease and New Year's Eve.

It is worth mentioning that the top two highest statistical expected annual yield of structured products, namely China Merchants Bank - Focus Equity Index Series performance linkage linkage (CSI 300 Index Closing bidirectional continuous touch with the terms) financial planning and Agricultural Bank of China - "Golden Key wishful combination" 2013 Section 15 bearish CSI 300 Index, the expected rate of return of 15% and 8.2%, respectively.

However, due to the effective yield of such products linked to the Index conditions, the reaction of the price of capital is low, without considering these two products, the recent short-term financial returns expected in the range between 2.7% -7.2% .

Chinese New Year effect is obvious livelihood, investment, financial pressure or a larger peace

It is worth noting that the recent financial gains the high or the upcoming Spring Festival effect is not without relevance.

Statistics show that before the expected rate of return financial products ranked 100, with more than half the number of days within 45 banking days, and most financial beginning on Jan. 2 or Jan. 3. Visible, its maturity located just around the Spring Festival.

"Generally speaking, banks often have to face two rounds of funding pressures, one is natural, the other is the Chinese New Year." Between an inter-bank market, traders said, "Nature is often deposit ratio of the annual assessment of factors point , and the Spring Festival is to try to ensure that there is sufficient cash. "

In the trader seems to happen at the end of the Spring Festival this year in January, which will exacerbate the impact of funds festive effect. "Spring Festival falls on the end, which branches of some banks may be more affected." The trader said.

On the other hand, the statistics are expected to yield lower portion of financial products are showing a short term character. For example, the expected rate of return of less than 4% of financial products to six days, seven days, such as ultra-short-term-oriented financial products - "Minsheng Bank - Zhou Zengli extraordinary asset management plan" (hereinafter referred to as Zhouzeng Li plans) accounted for a relatively large scale.

Statistics show that a total of 19 products expected rate of return is under 4 percent, Minsheng Bank, "Zhou Zengli plan" had 14, these products are expected to yield at between 3.2% -3.55%.

In fact, their lower earnings, or its short duration and maturity from the time of the Chinese New Year are still relevant, statistics show that the current 14 "Zhou Zengli plan" maturities until January 18, while the Chinese New Year on the eve of the possibility of such products is expected to rise in yields is still large.

It is worth mentioning that not all ultra-short-term financial gains are due before the holiday are low, Minsheng Bank more than just "extraordinary asset management bamboo" income products to more than 5%.

The recent short-term financial situation is expected to yield specific to banks, performance is not the same.

Statistics show that the expected rate of return of more than 6% of the 481 financial products, in addition to the Bank of China, Construction, labor, delivery, agriculture, financial products are four lines in his column, issue number was 116, 24, 24 and 21 only.

In addition, a total of 11 banks to issue more than 10 is expected to yield no less than 6% of financial products, in addition to the aforementioned big firms, but also includes people's livelihood, investment, peace, SPD four joint-stock banks and Nanjing, Hankou, Jiangsu three city firm.

Among them, the Minsheng Bank issued the expected rate of return of not less than 6% of the number of large financial, reaching 41, shares the peace line, two investment banks to issue number was 23 and 20. This may mean that the three stock funds or face greater pressure on banks around the Spring Festival.

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