China: Credit supply stays soft in October
Latest reading: In October, Chinese banks distributed CNY 500 billion in new yuan loans, up from September’s 1590 billion figure but below market expectations. Money supply grew 7.4% compared to the same month a year earlier in October, which was above September’s 6.8% increase. Meanwhile, the stock of total social financing (TSF)—a broader measure of credit and liquidity in the economy that includes loans, bonds and other non-traditional instruments—expanded 7.8% in the month (September: 8.0% yoy).
Panelist insight: Digging deeper into the latest data, Nomura analysts said:
“Despite the overall miss, the composition of credit data is not that bad as the headline number suggests. Thanks to a broad set of forceful policy easing measures rolled out since late September, credit demand has showed nascent signs of stabilization, especially in the housing sector, with a slowdown in bill financing. Government bonds were the largest drag due to a high base, while new fiscal deposits recorded their lowest October reading in five years, as fiscal spending may have quickened.”