The Shanghai Interbank Offer Rate (Shibor) ended August at 1.80%, which was a 33 basis point increase from July. However, that is still 45 basis points lower than the trailing average for August. That gap has been declining from 156 basis points in June, to 108 basis points in July, and now 45 basis points in August. Despite central bank intervention, the cost of borrowing is increasing for the state-owned banks.
The Wenzhou Comprehensive Index shot up to 19.21% at the end of August, up 113 basis points from July. That rate is still lower than the trailing average for August, which stood at 19.79%. August’s number told us two things. First, the collapse in real estate and equity prices may not have explained the fall in July’s interest rate. Second, even though the Wenzhou Comprehensive Index is declining, volatility is increasing.
