Investors concern about market liquidity calmed as money-market rates dropped after cash locked up to buy new shares returned to the banking system. The seven-day repurchase rate, a gauge of interbank funding availability, declined 151 basis points to 3.70% in Shanghai. Funding needs due to 10 IPOs that started last week drove the repo rate to an 11-month high of 6.18% on Dec. 22.
The Shanghai Composite has rallied 49% this year amid speculation the central bank will cut lenders reserve-ratio requirements to support growth after lowering interest rates for the first time in two years last month.
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