Depression: Residential Mortgages Account for 102pc of Lending Growth, Rate Cut Coming

Chinese bank lending in July 2016: 463.6 billion yuan
Chinese mortgages in July 2016: 477.3 billion

The last time this happened was July 2009 and early 2013. From Four Dimension Finance:
I did a little reaearch, in recent years, there have been two instances of negative growth in new credit, once in July 2009 and once at the start of 2013, the first time we know it is the Great Leap Forward of credit, credit that year was part of the four trillion yuan stimulus, full year credit exceeded 10 trillion yuan, negative credit growth in July was simply because of earlier overdraft. The negative growth in 2013 was a signal that China's economic was headed for a slowdown, afterwards the Chinese economy went into decline.

This time I think there are two factors, first-quarter lending was too fast, lending increased 4.61 trillion Q1 and in January alone it increased by 2.5 trillion. Another reason of course is the slump in manufacturing sector loans.

I recently had a chat with the president of a grassroots bank, they saw the collapse of a large number of small and medium enterprises, manufacturing enterprises reluctant to borrow, demand is very weak, very worried about the outbreak of bad loans, now the only source of relief is government projects, the platform loans, he said that because in his 30 years of lending experience, the government loans never go bad, at worst they are extended, so we are all seeking to lend to government projects, and this is the reason the lending platforms have too much money, also a reason for the jump in M1.

In fact, the problem is not that negative credit growth, pullback in M2 etc., but the loan structure, monetary structure, abnormal growth of real estate loans and the demand deposits problem.

How will this affect the central bank's monetary policy, the second quarter monetary policy report of the Central Bank said no RRR cut, in such sluggish monetary and credit conditions, the central bank to loosen or not loosen, will it be helpful? Whether RRR cut or rate cuts, I determine, interest rates cuts are not too far.
There's your Chinese economy. Companies afraid to borrow, shifting assets into demand deposits and sitting in cash, while banks chase down every government project in sight because they believe it's one of the only reliably good credits. Now those government loans have dried up as the infrastructure and real estate driven bounce wears off, signaling another downshift for the economy.

iFeng: 机构评7月金融数据:货币信贷雪崩 降息不会太遥远

No comments:

Post a Comment