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April 16, 2019

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Markets close down, despite strong credit growth

China’s A-share markets reversed their gains yesterday, with the three major indexes all retreating into negative territory, despite data showing strong credit growth for March.

The Shanghai Composite Index fell 0.34 percent, or 10.84 points, to finish at 3,177.79, after gaining more than 2 percent during morning trading.

Sentiment was largely lifted by the better-than-expected credit data released by the central bank on Friday.

The Shenzhen Component Index slumped 0.78 percent to end at 10,053.76 points, while the ChiNext Index was down 1.70 percent at 1,666.90 points. The combined turnover of Shanghai and Shenzhen was 775.7 billion yuan (US$115 billion), up from 657.1 billion yuan on Friday.

In March, China’s newly added social financing, a broad measure of credit and liquidity in the economy, increased to 2.86 trillion yuan, up 1.28 trillion yuan year on year.

The main surprises were a significant pickup in new bank loans and a revival of shadow credit, said Wang Tao, chief economist at UBS Securities.

Carmakers led the losses. State-owned Jiangling Motors shed 9.98 percent to 27.95 yuan. Agricultural and communication companies were also big losers.

Zhu Bin, a senior strategist at Southwest Securities, forecast the world’s second-largest economy will see a higher economic growth in the first half before slowing in the second, reported. The credit data confirmed a strong real economy, he said. The government introduced a new round of credit-easing in October.


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