Reuters: Chinese investors push "pledged" repo rates sky high to bet on IPOS

SHANGHAI, June 19 (Reuters) – Chinese investors hungry for cash to buy into upcoming initial public offerings have turned to little-known overnight pledged bond repurchase (repo) agreements for funds – driving up the cost of borrowing nearly four-fold for the week, with the cost of borrowing for 24 hours as high as 16 percent on Thursday.

“The main reason behind the performance of pledged repo rates in the Shanghai Stock Exchange is the restarting of IPOs, with both retail and institutional investors showing great enthusiasm for participation,” said a trader from a state-owned bank in Beijing.

Other commonly-traded instruments such as seven- and 14-day pledged repo contracts have posted similar rises over recent days.

The full article is available here.

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