The growth rate slowed again, with outstanding CNY loan growth dropping to 12.6% yoy in July from 13.0% yoy in June.
More disappointing, this was the second weakest TSF print of 2019.... ... and one of the lowest prints in recent years, coming at the worst possible time - just when China desperately needs much more liquidity to offset the slowing macro environment.
As Bloomberg reported over the weekend, the PBOC's unexpected coyness in the credit market is likely the result of the Beijing's hopes to hold on to some dry-powder for the coming winter in case trade war escalates further, while Nomura's Ting Lu noted that "Beijing simply cannot afford to stop easing yet."
Some more details from Goldman: adjusted TSF stock growth slowed down to 11.1% yoy in July, mainly dragged by the decline in banker's acceptance bill a key component of China's "Shadow" banking system, which continues to shrink as shown below.
Policymakers marginally tightened policies on the back of the following positive factors: activity growth was strong in June; the liquidity stress related to Baoshang Bank's takeover was gradually fading; trade negotiations appeared to be going smoothly at the time.
While next month's data may be stronger, for now expect continued downside surprises, and according to Goldman, July activity growth data to be released on Wednesday will likely be weak too, especially in light of the soft credit growth data today.
Given sequential growth already appears to be tracking at the low end of the target GDP growth range of 6-6.5%, it is very likely that the policy stance is likely being loosened again in August to support economic growth, especially since downward pressures on the economy have clearly increased - trade tensions escalated further, and after the news on Bank of Jinzhou and Hengfeng Bank, interbank market participants could still be worried about liquidity risks.
https://www.zerohedge.com/news/2019-08-12/more-bad-news-out-beijing-chinas-credit-engine-breaks-down
More disappointing, this was the second weakest TSF print of 2019.... ... and one of the lowest prints in recent years, coming at the worst possible time - just when China desperately needs much more liquidity to offset the slowing macro environment.
As Bloomberg reported over the weekend, the PBOC's unexpected coyness in the credit market is likely the result of the Beijing's hopes to hold on to some dry-powder for the coming winter in case trade war escalates further, while Nomura's Ting Lu noted that "Beijing simply cannot afford to stop easing yet."
Some more details from Goldman: adjusted TSF stock growth slowed down to 11.1% yoy in July, mainly dragged by the decline in banker's acceptance bill a key component of China's "Shadow" banking system, which continues to shrink as shown below.
Policymakers marginally tightened policies on the back of the following positive factors: activity growth was strong in June; the liquidity stress related to Baoshang Bank's takeover was gradually fading; trade negotiations appeared to be going smoothly at the time.
While next month's data may be stronger, for now expect continued downside surprises, and according to Goldman, July activity growth data to be released on Wednesday will likely be weak too, especially in light of the soft credit growth data today.
Given sequential growth already appears to be tracking at the low end of the target GDP growth range of 6-6.5%, it is very likely that the policy stance is likely being loosened again in August to support economic growth, especially since downward pressures on the economy have clearly increased - trade tensions escalated further, and after the news on Bank of Jinzhou and Hengfeng Bank, interbank market participants could still be worried about liquidity risks.
https://www.zerohedge.com/news/2019-08-12/more-bad-news-out-beijing-chinas-credit-engine-breaks-down
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