China October bank loans soften, social financing falls Chinas new bank lending hit a 10-month low in October and a broad measure of liquidity moderated from the previous month, adding to evidence the central bank may be turning to a tightening stance. Data released on Monday by the Peoples Bank of China (PBOC) showed banks made new yuan loans of 506.1 billion yuan ($83.10 billion) in October, lower than a forecast of 600 billion yuan and below the previous months 787 billion. The fall of new bank loans was matched by slower growth in the total social financing aggregate, a broad measure of liquidity in the economy. It stood at 856.4 billion yuan in October versus 1.4 trillion yuan the month before. The figures showed the central bank is tilting towards a tighter monetary policy compared with previous months, especially considering the rising inflation pressure in the fourth quarter, said Wang Jin, analyst from GuoTai Junan Securities in Shanghai. Chinas annual inflation climbed to an eight-month high of 3.2 percent in October, data showed on Saturday, fanning market worries about policy tightening as factory output and investment data pointed to signs of stabilisation in the economy. The Peoples Bank of China did not inject liquidity into the money markets during regular open market operations on Thursday, triggering worries it would start a new round of tightening in the next few months, traders said. We believe monetary policy tightening has started, and that new bank loans and total social financing will decline in Q4 from their high levels in Q3, Zhang Zhiwei, economist from Nomura said in a note to client. The central bank data also showed that the broad M2 money supply rose 14.3 percent last month from a year earlier, in line with the forecast in a Reuters poll of a 14.3 percent rise. Meanwhile, outstanding yuan loans rose 14.2 percent from a year earlier in October versus forecasts for growth of 14.3 percent. Still, some economists believe lower-than-expected loans and social financing figures are mainly seasonal factors and significant monetary tightening is unlikely in the near term. We believe monetary policy will be fine-tuned and the PBOC could prevent credit growth from quickening, but we dont expect the PBOC to significantly tighten monetary policies as new leaders still need a stable economic and financial environment to consolidate their power base, said Lu Ting, economist at Bank of America Merrill Lynch, in a research note. Confirming the governments hawkish stance on inflation, Premier Li Keqiang warned against further expanding already loose money policies last month. That echoed the central banks recent stance on its third-quarter monetary policy report, which promised to keep policy prudent with appropriate fine-tuning as well as to resolutely repress property speculation.
Posted on: Mon, 11 Nov 2013 10:29:26 +0000
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