TD On China August Credit Figures

The bank suggests the better than expected August credit figures paint some upside risks for Friday's activity prints in terms of IP and retails. However, this is not expected to be the start of a major trunaround.

• "After the dismal credit data in July, China's Aug credit surprised to the upside across most components and suggest that PBoC's efforts to push lenders to boost loans may be coming to fruition. Aggregate financing (a broad credit measure) was up CNY3,120bn (cons: CNY 2,690bn, Jul: CNY 528.2bn) and +9% y/y (Jul:8.9%). The recovery in aggregate financing was mostly driven by a boost in bank loans and a faster issuance of government bonds in August. Meanwhile, new yuan loans rose by CNY 1,360bn (cons: CNY 1,250bn, Jul: CNY 346bn) due to a pickup in household loans and this may accelerate in the months ahead as households ramp up mortgage borrowing after the loosening in property restrictions across major cities. M2 growth also held steady at 10.6% y/y (cons:10.7%, last:10.7%). Overall, the better credit data paints upside risk to our forecasts for Aug industrial production and retail sales on Friday though we find it difficult for markets to believe that the economy is at the cusp of a major turnaround without any notable fiscal stimulus."