New yuan lending hits 6-year high
Print Edition
NEW yuan loans in China surged to a six-year high in July as the money supply also spiked due to the government’s efforts to shore up the stock market, the central bank said yesterday.
Chinese lenders extended 1.47 trillion yuan (US$232 billion) in loans in the month, of which 886.4 billion yuan went to non-banking financial institutions, the People’s Bank of China said in a statement.
The new loans total rose 200 billion yuan from June, and was twice the 738 billion yuan predicted by a Reuters poll.
M2, the broad measure of money supply, rose 13.3 percent year on year in July, its biggest gain in 12 months.
China International Capital Corp said in a note that while the increased lending of recent months was a sign that the government’s stimulus measures were taking effect, the surge in July was fueled more by the emergency support for the stock market than real demand.
“Lending to financial institutions was mostly through China Securities Finance Corp as funds to stabilize the market, and that injection contributed significantly to the rebound of the M2,” the company said.
Securities authorities and brokerages are estimated to have pumped almost 1 trillion yuan into the stock market in early July, after it shed more than 35 percent of its value in a three-week slump starting mid-June.
“In general, the financial data for July are still weak, indicating sluggish demand from the real economy,” China International Capital said. “The weakening exchange rate indicated the central bank’s intention to further relax monetary policies.”
The weakening of the yuan was a one-off measure, the note said, adding that the monetary authority might continue to inject money into the market to offset capital outflows.
Total social financing, a broader measure of net new credit that includes loans, bank acceptance bills, corporate bonds and equity financing, fell to 718.8 billion yuan in July from 1.86 trillion in June, the central bank said.
The figure was under market expectations of 1 trillion yuan.
HSBC yesterday said it expects the central bank to cut interest rates by 0.25 percentage points and banks’ reserve requirement ratio by 2 full points in the second half of the year as part of its monetary and fiscal policies to support the economy.
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