China's direct financing market contracted in May

Published: 03 Jun 2009 00:25:39 PST

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Jun. 3, 2009 (China Knowledge) - China's domestic entities raised RMB 99.51 billion through direct financing in May, representing a 49.4% month-on-month decline, the China daily reported.

Equity financing, or financing by selling stocks, raised RMB 11.33 billion, down 45.1% month on month, while debt financing by selling bonds, bills, or notes raised RMB 88.18 billion, down 49.9% from a month earlier.

The decline in direct financing is attributable to the falling supply of medium-term notes and short-term financing bills.

Statistics show that the financing volume of medium-term notes plunged 62.7% to RMB 43.8 billon in May, while the financing volume of short-term financing bills declined 47.2% to RMB 10.5 billion.

In May, domestic firms raised RMB 3.9 billion through corporate bond issuance, indicating a month-on-month decrease of 49.4%.

In terms of equity financing, experts predicted that the resumption of IPOs in the A-share market will drive an increase in direct financing in the near future.

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