MNI 5 THINGS: China July M1 At 3-Year Low On Weak Investment

     BEIJING (MNI) - The following are the key points from China's July money

supply and credit growth data, released by the People's Bank of China on Monday:

     - New loans increased by CNY1.45 trillion in July from June, higher than

the MNI analyst survey median forecast of CNY1.20 trillion. While softer than

the CNY1.84 trillion m/m increase recorded in June, the rise in new loans was

nonetheless much higher than last July's CNY825.5 billion, indicating that

credit demand via the loan channel remains strong.

     - Total social financing (TSF), a broad measure of credit and liquidity in

the economy, grew by CNY1.04 trillion in July over June. The reading came in

lower than MNI's survey median of CNY1.10 trillion, and was down from June's

CNY1.18 trillion. Although the PBOC has made efforts to boost credit supply,

including via the provision of window guidance to big lenders, low risk appetite

among banks continues to weigh on credit growth.

     - Shadow banking finance contracted at a softer pace in July, as regulators

relaxed their tight grip. Trust loans, entrusted loans and undiscounted bankers'

acceptances decreased by CNY488.6 billion altogether in July, compared to a

decline of CNY691.7 billion in June.

     - M2 grew at a 5-month high of 8.5% y/y in July, coming in above the 8.2%

median in the MNI survey and up from a record low of 8.0% y/y in June. July's

rise was likely helped by the central bank's liquidity-supportive measures.

     - M1 growth, on the other hand, fell from 6.6% in June to a three-year low

of 5.1% in July, indicating that firms are holding less cash as their

willingness to invest is decreasing amid a weaker economic outlook.

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44 207-862-7489; email: ukeditorial@marketnews.com

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