Fading Shadow Banking

Some discussion by analysts about the drop in shadow banking last month. Credit growth from public infrastructure slowed in May, credit to consumers increased. Credit is tightening because there was less of an offset from on-balance-sheet lending than in prior months.

iFeng: 5月社融增量腰斩背后：非标已死还是宏观经济警钟？

Overall, the social financial data in May sounded the alarm for the macro economy and also challenged the current regulatory policy. If social finances continue to remain weak, the toughness demonstrated by the Chinese economy in the past few months will be difficult to sustain. Under the credit environment, the lack of corporate financing will further stimulate credit defaults, which in turn will prompt financial institutions to tighten financing conditions and create a vicious cycle. The risk of risk management will increase significantly, and regulatory policies will need to make appropriate adjustments.

The monetary policy may continue to push down the RRR, so as to encourage banks to provide credit. However, the slow return of debt and the lack of bank capital will not be able to solve the problem for the time being. The high credit risk will also reduce the willingness to provide credit. In the short term, the regulatory policy Before a modest adjustment is made, the economic downturn is expected to resume and the bond market is expected to be supported. The only certainty is that the central bank will not rashly tighten liquidity at this time.

Hai Tong Jiang Chao, Liang Zhonghua: Non-standard bonds shrank, and social financial growth continued to fall!

1. Social growth rate continues to fall.

In May, the total amount of newly-added social financing totaled 760.8 billion yuan, a deceleration of 302.3 billion yuan year-on-year, and the growth of the stock of social financing continued to drop to 10.3%. From a structural point of view, off-balance-sheet non-standard financing continues to shrink, with commissions, trust loans, and undiscounted bank acceptance bills continuing to decrease by more than RMB420 billion in May, a slight increase of RMB450 billion year-on-year, which remains a major drag on social financial growth. As bond market adjustments and credit default incidents increased, the net financing of credit bonds in May decreased by 43.4 billion, which weighed on social and financial growth. Only loans to entities increased by 1.14 trillion yuan, but also by 38.4 billion yuan year-on-year, indicating that the vast majority of financing needs are difficult to transfer from the balance sheet to the table.

2. Corporate financing continues to decline.

In May, new loans from financial institutions reached 1.15 trillion yuan, an increase of 40.5 billion yuan year-on-year. Among them, loans to residents increased by 614.3 billion yuan, which was basically the same as that of the same period of last year. However, residents' long-term loans still decreased by 40 billion yuan year-on-year, reflecting the impact of cooling real estate sales. In May, corporate middle and long-term loans grew by 403.1 billion yuan, a deceleration of nearly 40 billion yuan year-on-year. Given the impact of local debt swaps, this growth rate was not low, but due to non-standard corporate bonds, bond financing fell sharply, and financing in the broader corporate sector increased. The speed continued to decline sharply.

3. M2 growth rate remained flat at 8.3%.

Social financial growth slowed down and money creation activities slowed down. However, fiscal deposits were slower to repatriate than in the same period of last year. In May, the year-on-year growth rate of M2 was 8.3%. In the context of the policy of controlling macro leverage ratio, the overall financing environment has tightened, and it is expected that M2 will maintain its low growth status. May's M1 growth rate was 6% year-on-year, and M0's growth rate was 3.6%, continuing its downward trend.

4. Financing is still declining and the economy is under pressure.

Since the beginning of the year, financial supervision has completely blocked non-standard financing and channel operations. At the same time, it has blocked the “back door” and opened the “main entrance” through floating deposit interest rate ceilings, RRR cuts, and MLF guarantee expansion to support entity loan and bond financing. However, in the context of strict supervision, there is a certain difficulty in the transfer of existing non-standard financing to on-balance sheet loans and bonds, and the overall social financial growth rate will continue to decline. In the short term, the rebound in economic production in April and May was mainly due to the fact that this year's recovery and start-up were relatively late, and production was released in the short term. There was a new “seasonality”. However, the fall in financing will inevitably put pressure on the economy, and this pressure will be more obvious in the second half.

China Gold Futures, Chen Jianheng, Dan Tanghua, and Zhu Weikang: Social capital falls, loan ratio rises, economic aggregate is not weak but structural differentiation

The more-than-expected financial data in May was that social financial data was significantly lower than expected, while loan growth and M2 growth generally had little deviation from market expectations. The shrinking of social financing is mainly under the background of strict supervision this year. Non-standard and bills continue to shrink, which is a normal effect of policy control. In addition, this year, PPP and urban investment platform financing tightened, infrastructure investment slowed down, and capital requirements It has also weakened, and it is also one of the reasons for the weakening of social finances. In terms of loan structure, the weaker increase in public loan in May also reflected this decline in financing demand to some extent. Looking at this year, the proportion of loans in social financing continues to rise. This year's cumulative increase has accounted for more than 87%, which has become the main tool to support financing. In addition, the increase in overseas bond financing this year partially compensated for the decline in domestic financing. On the whole, with the shrinking industry peers, slower financial management, and more financing back to the table, this year's mainstream trend is difficult to reverse.

Although the growth rate of social financial resources has declined, the growth rate of social financial balances remains at a level slightly higher than 10%, still higher than the growth rate of GDP. Judging from the macro data, the overall economy is not weak at present, but the structural differentiation is obvious. The prosperity of the upstream and middle industries is high, while the downstream is weak. In addition, the financing of state-owned enterprises is relatively more secure, and the difficulty of financing for SMEs has increased. Therefore, the division of enterprises this year has also significantly increased. Given that deleveraging is the main tone of the policy, we expect no apparent relaxation of monetary policy or financial supervision policy. However, in order to ease local pressure, there may be targeted fine-tuning policies. The macro aggregates are not weak, and the micro-differentiation is intensifying, which makes the bond investment level need to pay more attention to different types of bonds. In particular, the yield curve becomes steeper, credit spreads widen, and interest rates also divide accordingly. The interest rate debt will be the most secure investment strategy.

1. New loans are basically in line with expectations and weak to the public

In May, new loans amounted to 1,150 billion yuan, of which, social financing loans totaled 1,140 billion yuan, basically in line with expectations, and current loan demand remained strong. Structurally, short-term loans and bill financing increased by RMB 308.2 billion during the month, which was higher than the same period of last year. Net long-term loans increased by RMB 795.4 billion, slightly lower than that in April and the same period of last year. The recovery of bill financing was new loans over last year. The main reason for the same period. Compared with the same period of last month and the same period of last year, the proportion of residential loans increased (from 45% in the previous month to 53%), slightly weaker against public loans (accounting for 46% of the previous month's decline from 49% in the previous month). This is related to the decline in infrastructure financing and the tightening of supervision. With limited mortgages, the growth rate of medium and long-term residents' loans is limited, but short-term loans continue to rise. Specifically, residents' short-term loans increased by 222 billion yuan (up 44 billion yuan year-on-year), medium- and long-term loans by 392.3 billion yuan (40.3 billion yuan year-on-year), public short-term loans by 58.5 billion yuan (down 205.7 billion yuan), and medium- and long-term loans increased by 403.1 billion yuan ( The year-on-year decrease was 36.5 billion); bill financing was 144.7 billion (an increase of 291.6 million over the same period of last year). From a follow-up perspective, residents' loans may be further tightened, and residents' leverage growth may continue to slow. If the enthusiasm of residents to buy a house does not significantly reduce, it will continue to affect other consumption.

2. Deposits are still weak, and the year-on-year growth rate of M2 is affected by the base number.

In May, the growth rate of M1 continued to decline to 6% year-on-year, falling to the low level in the first half of 2015; M2 was affected by the low base last year, and the growth rate remained 8.3% year-on-year (after the introduction of the 343 policy in April last year, the equity in May and Other investments have shrunk dramatically, and M2 growth also fell below 10% in May last year.) Regarding deposits, new RMB deposits reached RMB1.3 trillion in May, and the deposit balance grew 8.9% year-on-year, still relatively weak. Of which, residents’ deposits increased by 216.6 billion yuan, which represented an increase of 91.7 billion yuan over the same period of last year; however, corporate deposits only increased by 13.9 billion yuan, which was related to the current tight financing demand of some companies and limited liquidity; fiscal deposits increased by 386.2 billion yuan in May, not exceeding Seasonality, this year's fiscal deposits as a whole is more smooth than last year; non-banking financial institutions deposits increased by 214.4 billion yuan, higher than the same period last year 98.3 billion yuan. Under the general lack of growth in deposits, banks’ demand for active liabilities increased, which also led to a rise in the volume of deposits in May.

3. Social Wealth has shrunk sharply, non-standard and credit debts have been negatively increased, and the regulations on new regulations on assets management have also brought about certain impacts.

The increase in the scale of social financing in May was 760.8 billion yuan, which was 302.3 billion yuan less than the same period of last year. It was even more dear than in April. Among them, only stock financing was growing: Foreign currency loans decreased by 22.8 billion yuan, entrusted loans decreased by 157 billion yuan, trust loans decreased by 90.4 billion yuan, undiscounted acceptance bills decreased by 174.1 billion yuan, corporate bonds decreased by 43.4 billion yuan, and stock financing increased by 43.8 billion yuan. . From the perspective of capital providers, the details of the new regulations on assets and capital management have not been settled yet. Banks and trusts are in a wait-and-see state, and their businesses are cautious. No matter whether they are buying debts or non-standards, they are at a standstill. Therefore, tightening is obvious, and follow-up attention is paid to the progress of the detailed rules. Once in place, each channel may be partially restored. From the perspective of capital demanders, under the tightening of financing of PPP clearing houses and urban investment platforms this year, infrastructure investment has slowed down, and the demand for funds has also been weakened, which is also one of the reasons for weakening social financing. Specifically:

(1) Since the credit default risk has increased since April, the issuance of credit bonds has been difficult, and the net increase in corporate bond issuance has turned negative for the first time. In addition, due to the supplemental annual reports, the issuance of credit bonds is weaker in May every year.

(2) The channel to go has not yet been completed, the decline in trust loans has increased, and the decline in commissioned loans has been relatively stable, and will decrease further in the future. After the introduction of the new regulations on asset management, off-balance-sheet financial management has shrunk significantly due to non-standard conditions, but the details have not yet been settled. The trust companies still generally report that they are afraid to conduct business. The trust balance data released in April showed that the trend of channel service compression is very high. obvious. Entrusted loans and trust loans will be under pressure.

(3) The bill financing in the table was stronger this month, but the off-balance sheet bill financing (undiscounted bill acceptance) turned negative, which is a normal effect of the recent regulation of the bill financing policy.