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BEIJING (MNI) - Growth in Chinese new bank lending and total social
financing (TSF) were much stronger than expected in November, according to data
released Monday by the People's Bank of China.
M2 also recovered in November, rising 9.1% year-on-year to CNY167.00
trillion. The November growth rate accelerated from 8.8% in October and was
above the MNI survey median expectation of 8.9%.
"The lower growth of M2 in October was because of a large increase of
fiscal deposits, which dragging down M2 growth by around 0.3-0.4 percentage
point," analysts at Bank of Communications (BoC) said. "Usually the impact of
fiscal expenditures is short-term, so November M2 growth was more normal," they
In addition, "the higher growth of M2 in November is also caused by a
strong growth in new loans."
Total new loans grew CNY1.12 trillion in November, nearly double the
increase of CNY663.2 billion recorded in October and well the MNI survey
expectation for a CNY800 billion gain.
"Policy banks increased loan issuances in November to support building in
shanty areas and aiding the poor," analysts at China International Capital Corp.
The short-term household loans grew CNY202.8 billion in November, nearly
three times the growth of CNY79.1 billion in October, due in large part to the
online shopping spree on November 11, so called Single's Day, when big online
shopping websites like Alibaba and JD.com offered large discounts and banks
increased the limits on consumers' credit cards.
Medium- to long-term loans to households rose by CNY417.8 billion in
November, above the CNY371.0 billion gain in October.
"The data suggest the influence of government controls on the real estate
sector seem to be taking effect more slowly than expected," analysts at BoC
said. "But it is also possible that the influence of lower mortgage demand in
[larger] Tier 1 and Tier 2 cities caused by [tighter] regulations are being
offset by new mortgage demand in [smaller] Tier 3 and Tier 4 cities."
Short-term and medium- to long-term loans to non-financial businesses where
both stronger in November than in October. Short-term loans to non-financial
firms grew CNY19.7 billion, well above the decline of CNY1.13 billion in
October, while medium- to long-term loans rose CNY427.5 billion in November,
double the increase of CNY236.6 billion the month before.
"The data show the government's campaign to direct money into the real
[economic] sector is having a great effect," analysts at BoC said.
The targeted required reserve ratio cut which will become effective on
January 1, which encourage banks to issue more loans to micro and small
companies as well as the agricultural sector, also contributed to the rise of
new loans, analysts at Lianxun Securities said.
But new lending may slow in December, analysts said.
"Loan issuance so far this year has totalled CNY12.9 trillion, larger than
the CNY12.4 trillion last year," analysts at CICC noted. "Under macro prudential
assessment controls, [banks'] remaining loan quotas are very small and
regulators are likely to curb new loan issuance to prevent lending from growing
too much. So we expect the new loan growth in December will slow sharply."
Growth of Total Social Financing (TSF), the broadest measure of financing
in the economy, accelerated significantly to CNY1.60 trillion from CNY1.04
trillion in October, and was also higher than the MNI survey median expectation
for a CNY1.29 trillion rise. The increase was mainly caused by high new yuan
loan issuance to the real economy, which totaled CNY1.14 trillion in November,
well above the CNY663.5 billion gain in October.
Shadow bank financing strengthened slightly from October: entrusted loans
increased CNY28 billion in November, up from a gain of CNY4.3 billion in
October; trust loans rose CNY143.4 billion up from 101.9 billion; and
undiscounted bankers' acceptances rose CNY1.5 billion, compared with growth of
CNY1.2 billion in October.
"The new regulations on the asset management industry may have caused some
financial institutions to expand their shadow banking activities as much as
possible in the short-term before the new rule becomes effective," analysts at
CICC said. "But we expect expansions of these kind of products will be lower
when the new regulation becomes effective."
Net corporate bond financing rose CNY71.6 billion in November, less than
half the rise of CNY150.8 billion in October. But equity issuance by
non-financial enterprises on domestic stock markets rose CNY132.4 billion,
double the CNY60.1 billion in October.
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