MNI DATA IMPACT: China Sep M2 At 3-Mo High; Credit Expanding

China's M2 money supply rose 10.9% y/y in September, registering a three-month high and the second highest level this year, data released Wednesday showed.

Growth quickened from the 10.4% seen in August, as the People's Bank of China net injected CNY290 billion into the interbank market through the month, indicating it kept an ample liquidity condition with the economy still recovering from the Covid-19 hit. The figure beat the median market forecast of 10.4%.

Meanwhile, the credit data expanded faster than expected, as financial institutions ramped up their support to the real economy, with companies also increasing their financing from the bond and stock market, said Ruan Jianhong, head of PBOC's statistics department at a briefing after the data release. Ruan also noted the accelerated issuance of governemnt bonds.

Among the key metrics:

• M1 growth picked up 8.1% y/y from the previous 8%, reflecting a robust cash flow, tracking the acceleration in M2. M0 grew 11.1% y/y from Aug's 9.4%.
• Aggregate financing to the economy edged down to CNY3.48 trillion from August's CNY3.58 trillion, but still outperforming the CNY2.9 trillion projected by analysts. It accelerated to 13.5% y/y from 13.3% in Aug.
• New loans rose to CNY1.9 trillion in September from the CNY1.28 trillion in Aug, outshining the forecast CNY1.7 trillion, mainly contributed by medium and long-term loans. Ruan noted that outstanding medium and long-term loans in sectors affected by the epidemic has increased significantly, while the growth rate of loans to SMEs also continued to rise in the first seven months in a row.
• Shadow banking transactions expanded by CNY2.7 billion, compared to the CNY71.0 billion expansion in Aug. This is mainly driven by the expansion of undiscounted bankers' acceptances which rose CNY150.3 billion in Sep, while entrusted loans and trust loans declined by CNY31.7 billion and CNY115.9 billion, respectively.