MNI China Press Digest May 11: A Shares, Debt Ratio, Credit

The following lists highlights from Chinese press reports on Wednesday:

• China’s top securities regulator will focus on stabilizing market expectations, capital flows and market behaviour to smoothen A share market operations, Xinhua News Agency reported, citing Wang Jianjun, vice chairman of the China Securities Regulatory Commission. The CSRC will encourage listed companies to repurchase shares, increase holdings by major shareholders, boost dividends and support resumption of work and production amid Covid outbreaks, Xinhua cited Wang as saying. Though there was a net outflow of foreign capital in the trading of Shanghai and Shenzhen Stock Connect in March, but it turned into a net inflow in April, Wang said. He noted long-term funds have maintained a net inflow so far this year, indicating foreign investors' optimism about the long-term investment value of A shares.
• China’s macro leverage, or debt-to-GDP ratio rose by 4.4 percentage points to 268.2% in Q1 from the previous quarter, as debt growth recovers while economic growth is at a low level, Yicai.com reported citing a report by the National Institution for Finance & Development. The main driver was the sharp increase in the leverage ratio of non-financial enterprises, reflecting easier credit supply, the report said. The macro leverage ratio may rise by more than 10 pps in 2022 should the annual GDP fail to reach 5%, the report said. This compares to 2021 when the ratio dropped by 6.3 pps amid a steady economic recovery with the epidemic under control, Yicai said.
• Large banks in China are expected to lower provision coverage ratios to release more funds to support the real economy, the Economic Information Daily reported citing analysts. Funds released can be used to increase write-offs of non-performing loans and boost credit supply, the newspaper said citing Ming Ming, chief economist of CITIC Securities. Ten listed banks have already cut the ratio in Q1, with China Merchants Bank making the largest cut by 21.19 percentage points to 462.68%, the newspaper said.