China: Credit data is soft in November
Latest reading: In November, Chinese banks distributed CNY 580 billion in new yuan loans, up from October’s 500 billion figure but close to half of market expectations. Money supply grew 7.1% compared to the same month of the previous year in November, which followed October’s 7.5% 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 (October: 7.8% yoy).
Panelist insight: Providing a caveat to the latest data, Nomura analysts said:
“New aggregate financing came in below market expectations, mainly due to much weaker-than-expected new RMB loans. However, in our view, this should not be read as a sharp deterioration in loan demand. Part of the weakness in bank loans was a result of the hidden debt swap program, as a large-scale of local government bonds were issued to swap out LGFV loans. A lack of information on when and the extent of LGFV loans replaced by bonds poses a challenge on forecasting monthly loan data.”