China’s broad money supply growth was the slowest on record in June, while on-balance-sheet loans beat analyst expectations, as Beijing continues efforts to reign in off-balance-sheet borrowing. New loans exceeding expectations may be a sign of pressure on shadow banks.
“Loan and total-social financing data came stronger than market expectations, reflecting the strong demand driven by fixed asset investment,” ANZ economist David Qu was quoted by Bloomberg as saying “In addition, we think that the deleveraging in the shadow banking sector drove some of the demand to loans.”
Key data from Bloomberg/People’s Bank of China:
- Aggregate financing was 1.78 trillion yuan (US$262 billion) according to the PBOC versus Bloomberg survey estimate of 1.5 trillion
- New yuan loans of 1.54 trillion yuan, beat estimates of 1.3 trillion
- M2 money supply was up 9.4%, versus forecast of 9.5%. It was the second record low in a row after the 9.6% increase in May
- YOY growth in foreign currency loans and deposits accelerated to 6.1% from 5.1% for loans, and to 20.9% from 18.4% for deposits
- Outstanding aggregate financing grew to 166.9 trillion yuan as of the end of June, according to the PBOC