RMB loan and TSF data came in above expectations after the very weak credit growth in July. Seasonal patterns and policy easing likely contributed to the rebound of credit growth in August. After our seasonal adjustment, household loan growth accelerated to a still-modest 4.7% month-over-month annualized from 0.8% in July, mainly due to faster household short-term loan growth. Corporate medium to long term loan growth increased to 12.2% month-over-month annualized from 7.3% in July. Overall total social financing growth was 8.9% month-over-month annualized, faster than 6.9% pace in July, with both bond issuance and loan extension improved in August. September credit growth could remain solid. TSF growth will still be supported by strong government bond issuance as there remains around RMB660bn local government special bond quota to be issued by the end of September. Interbank rates drifted higher in recent weeks. We continue to expect a 25bp RRR cut before the end of September to facilitate government bond issuance.
New CNY loans (flow, reported): RMB 1.36tn in August (RMB loans to the real economy: RMB 1.34tn) vs. Bloomberg consensus: RMB 1.3tn, GS forecast: RMB1.3tnOutstanding CNY loan growth: 11.1% yoy in August (10% mom sa ann, estimated byGS); July: 11.1% yoy (+7.8% mom sa ann).Total social financing (TSF flow, reported): RMB 3.12tn in August, vs. consensus: RMB 2.7tn, GS forecast: RMB 2.8tnTSF stock growth: 9.0% yoy in August, vs. 8.9% in July. The implied month-on-month growth of TSF stock: 8.9% in August (seasonally adjusted annualized rate), vs. 6.9% in July.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
