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MNI China Press Digest May 13: M2, Stocks, Sino-German Relations

MNI (Singapore)
MNI (Beijing)

MNI picks key stories from today's China press

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Highlights from Chinese press reports on Monday:

  • The deceleration of M2 money supply growth was mainly driven by residents' increasing enthusiasm for buying financial management products which have diverted bank deposits, and also reduced the need for non-bank institutions to borrow from banks, Yicai.com reported citing Zhang Yu, chief macro analyst at Huachuang Securities. More than CNY2 trillion of companies’ and residents’ deposits were diverted to asset-management products in April from March, an unnamed source said. Meanwhile, a considerable number of inflated and irregular deposits and loans have been reduced amid tightening regulations, which also slowed down M2 growth to 7.2% y/y in April from March’s 8.3%, Zhang noted.
  • China’s asset prices are expected to be fully restored as various funds rush to allocate to Chinese stocks, Shanghai Securities News reported. Active private equity positions have rapidly increased to 76% from 65% since end-March, while northbound funds have flowed in rapidly with a net of CNY32.9 billion since April 22 mainly to the banking, food and beverage, nonferrous metals, pharmaceuticals and basic chemicals sectors, according to CITIC Securities. However, analysts from Soochow Securities argued that the entry of larger-scale and longer-term funds into the market requires a more solid turnaround of economic fundamentals.
  • The EU will be less likely to take protectionist measures against China given Germany’s strong economic relationship with Beijing, according to Zhu Ying, professor of economics at Shanghai Normal University. Germany plays a special role in China's economy and trade relations, with about 5,000 firms operating in the country, Zhu added. Automakers from Germany are increasingly relying on Chinese teams for R&D in areas such as autonomous driving, where Europe is not advanced. (Source: Yicai)
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Highlights from Chinese press reports on Monday:

  • The deceleration of M2 money supply growth was mainly driven by residents' increasing enthusiasm for buying financial management products which have diverted bank deposits, and also reduced the need for non-bank institutions to borrow from banks, Yicai.com reported citing Zhang Yu, chief macro analyst at Huachuang Securities. More than CNY2 trillion of companies’ and residents’ deposits were diverted to asset-management products in April from March, an unnamed source said. Meanwhile, a considerable number of inflated and irregular deposits and loans have been reduced amid tightening regulations, which also slowed down M2 growth to 7.2% y/y in April from March’s 8.3%, Zhang noted.
  • China’s asset prices are expected to be fully restored as various funds rush to allocate to Chinese stocks, Shanghai Securities News reported. Active private equity positions have rapidly increased to 76% from 65% since end-March, while northbound funds have flowed in rapidly with a net of CNY32.9 billion since April 22 mainly to the banking, food and beverage, nonferrous metals, pharmaceuticals and basic chemicals sectors, according to CITIC Securities. However, analysts from Soochow Securities argued that the entry of larger-scale and longer-term funds into the market requires a more solid turnaround of economic fundamentals.
  • The EU will be less likely to take protectionist measures against China given Germany’s strong economic relationship with Beijing, according to Zhu Ying, professor of economics at Shanghai Normal University. Germany plays a special role in China's economy and trade relations, with about 5,000 firms operating in the country, Zhu added. Automakers from Germany are increasingly relying on Chinese teams for R&D in areas such as autonomous driving, where Europe is not advanced. (Source: Yicai)