Business Cycle Dynamic Tracking Series(25)
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Yesterday, the Financial Data for January was released in advance. Recently, all sectors of society are very confused and anxious about the economic and market trends, and all parties are worried about the "credit collapse". In January, the new social finance hit a record high and fired the first shot of steady growth. However, we cannot slack off and ignore the hidden concerns of weak physical needs behind the data. Instead, we must roll up our sleeves and work hard, work hard, and win the final victory in the defense of steady growth.
Below we analyze the financial data for January in accordance with the usual practice, and overall, the social finance has grown strongly, and the growth of new RMB loans and M2 has exceeded expectations. In January, RMB loans increased by 3.98 trillion yuan, better than the expected 3.76 trillion yuan, an increase of 400 billion yuan year-on-year. The scale of social financing increased by 6.17 trillion yuan, an increase of 981.6 billion yuan year-on-year, and the previous value was 2.37 trillion yuan. M2 grew 9.8% year-over-year, better than expected at 9.4%, compared to 9% in the previous month.
Specifically:
1) New RMB loans are better than expected, and the overall structure is average. In January, 3.98 trillion yuan of new loans were added, 220 billion yuan higher than expected, an increase of 400 billion yuan year-on-year, relatively strong. From the sub-point of view, bill financing increased by 178.8 billion yuan, an increase of 319.3 billion yuan year-on-year; short-term loans increased by 1.11 trillion yuan, an increase of 203.7 billion yuan year-on-year (Figure 1), which is the main reason for the increase in the total amount; medium- and long-term loans increased by 2.84 trillion yuan, an increase of 142.4 billion yuan year-on-year, which is the biggest drag factor. The sharp rise in bill financing is more reflective of the central bank's efforts on the supply side of credit expansion, while the small increase in medium- and long-term loans reflects weak physical demand.
Figure 1: New RMB loan structure
2) The significant year-on-year decrease in medium- and long-term new loans for residential households is the main reason for the increase in medium- and long-term new loans. Among the medium- and long-term loans in January, the medium- and long-term loans of non-financial companies increased by 2.1 trillion yuan, which was basically flat year-on-year. This is relatively consistent with the January PMI data, i.e. production activity remains relatively stable and tepid.
Medium- and long-term loans to residential households increased by 742.4 billion yuan, an increase of 202.4 billion yuan less than that of the same period in 2020 (Figure 2). Medium- and long-term loans to households mainly mortgage loans continued to increase significantly year-on-year, reflecting the current lack of willingness to buy houses and weak demand. However, compared with the decline in new home sales, the decline in medium- and long-term loans for residents is not significant. According to Kerry data, the monthly sales amount of top 100 housing enterprises in January decreased by about 40% year-on-year, indicating that banks are likely to "overdraft" part of their credit needs in order to "impulse" in January. Therefore, if the downward trend of the real estate market is not reversed in time, it may still lead to a certain risk of "collapse" in credit.
Figure 2: Medium- and long-term loan structure of financial institutions
3) In terms of balance year-on-year, the growth rate of RMB loans shows signs of stabilization. In January, the balance of loans increased by 11.53% year-on-year, down 0.02 percentage points from the previous month, basically flat. In terms of sub-items, the year-on-year growth rate of medium- and long-term loan balances continued to decline; the year-on-year growth rate of short-term loans and bill financing increased is the key to the stabilization of RMB loan growth, and the follow-up sustainability remains to be seen (Figure 3).
Figure 3: The balance of RMB loans is year-on-year
4) In the total amount of new social financing, direct financing such as government bond financing has accelerated significantly. The total amount of new social financing in January was 6.17 trillion yuan, an increase of 981.6 billion yuan year-on-year. Among them, government bond financing increased by 602.6 billion yuan, an increase of 359.8 billion yuan year-on-year, which is the second largest driving factor for the year-on-year increase in new social financing in addition to RMB loans. The increase in government bond financing was mainly affected by the acceleration of local bond issuance in January. In January, the issuance of local bonds increased by about 350 billion yuan year-on-year by about 350 billion yuan in january. This is consistent with the early allocation of special debt quotas and the acceleration of fiscal expenditure, but the special debt quota is said to remain unchanged this year. Under the constraint of the unchanged total budget, the subsequent slowdown of special debt will be predictable. In addition, corporate bond financing also contributed an important force, adding 579.9 billion yuan, an increase of 188.2 billion yuan year-on-year. (Figure 4).
Figure 4: Total social financing - direct financing increased
5) The pressure drop in shadow banking has slowed. Shadow bank financing increased by 447.9 billion yuan in January, an increase of 32.8 billion yuan year-on-year. Among them, trust loans decreased by 68 billion yuan, an increase of 16.2 billion yuan year-on-year, and continued to increase more than the same period lasted for the second month (Figure 5). This seems to indicate that the real estate trust policy has also been relaxed, and off-balance sheet financing has begun to be active. Although the overall size is small, it shows that the risk appetite of trusts and real estate developers is gradually repaired.
Figure 5: New financing from shadow banks
6) The growth rate of total social financing and M2 continue to stabilize and rebound. In January, the stock of social financing scale increased by 10.5% year-on-year, up 0.2 percentage points from the previous month, and the growth rate rebounded for three consecutive months. At the same time, M2 grew faster than expected in January, with a year-on-year growth rate of 9.8%, up 0.8 percentage points from the previous month. This shows that with the support of policies, money and social finance have begun to expand, which is an important guarantee for stabilizing the economy.
Figure 6 The stock of social financing is year-on-year with M2
7) The growth rate of M1 has declined, and the difference with M2 scissors has widened. In January, M1 fell 1.9% year-on-year, down 5.4 percentage points from the previous month. As the year-on-year growth rate of M2 rebounded from the previous month, the difference between M1 and M2 scissors further widened. This shows that it often indicates that the market demand is not strong, and there are certain economic downside risks.
Around mid-January, grassroots survey data showed that the loan data of major commercial banks was not ideal, and there was a year-on-year decline. Vice Governor Liu of the central bank immediately called for "a bigger policy toolbox", sending a clear signal to the commercial banking system. With the efforts of all parties, the January credit volume arrived as expected, showing that you can always trust PBoC.
But at the same time, we also see that credit creation depends not only on the central bank, commercial banks, but also on the demand of the real economy, and from the January real estate sales data, the demand is still weak. If the real estate industry cannot be reversed as soon as possible, or if there is a significant acceleration in infrastructure construction, then it will be difficult to use administrative mobilization and credit demand to create a "start".
Therefore, in the future, stable growth requires coordinated efforts and forward-looking actions by various departments, especially the financial sector and the real estate industry that have a direct impact on the demand side, and more powerful actions should be taken, such as increasing the deficit rate, increasing the scale of special debt, increasing the growth rate of infrastructure construction, and substantially relaxing the real estate loan restriction policy. It is believed that with the implementation of measures to stabilize growth in various departments, the growth of credit demand will gradually recover, and the growth momentum will continue to increase.
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