C50 Wind Direction Index Survey of the Financial Associated Press: New credit in October may increase slightly year-on-year, and the growth rate of social finance continues to pick up There is still a possibility of RRR reduction and MLF excess continuation during the year
Finance Associated Press, November 6 (Reporter Xia Shuyuan) The results of the new "C50 Wind Direction Index" of the Finance Associated Press show that the median forecast of market institutions for new RMB loans in October is 0.64 trillion yuan, a slight increase from 615.7 billion yuan in the same period last year.
At the same time, the median forecast of market institutions for new social financing in October is 1.81 trillion yuan, an increase from 913.4 billion yuan in the same period in 2022.
In terms of prices, nearly 50% of the participating institutions predict that the CPI growth rate in October will be the same as that of the previous month, and the average year-on-year decline in PPI will be -2.7%, which is a correction from the previous value of -3%. It is worth noting that the industry expects that the central bank's attitude towards caring for liquidity is still clear, and the follow-up or will continue to adopt the method of peak shaving and valley filling to maintain the smooth operation of the capital side, and at the same time, the probability of reducing the reserve requirement ratio or exceeding the MLF within the year is relatively high.
The "C50 Wind Direction Index Survey" was initiated by the Financial Associated Press and completed by various research institutions in the market, and the results can comprehensively reflect the expectations of market institutions on macroeconomic trends, monetary policy feelings and financial data. Nearly 20 institutions participated in the survey.
The year-on-year reading of CPI in October may be basically the same as that of the previous month, and the PPI will retreat slightly year-on-year
Looking back at the September price data, the CPI growth rate turned flat year-on-year from a year-on-year increase of 0.1% in August, and the PPI fell by 2.5% year-on-year, narrowing the decline from the previous value of -3%.
For the year-on-year CPI reading in October, many institutions forecast a median of -0.1%, with the highest and lowest forecasts of 0.1% and -0.2% respectively. Among them, nearly 50% of the participating institutions predict that the CPI growth rate in October will be the same as that of the previous month.
According to the analysis of the National Economic Research Center of Peking University, due to the loose supply of pork and the decline in the price of vegetables and eggs, food prices fell month-on-month, and non-food items were affected by the decline in travel demand and the cost of industrial consumer goods, and non-food prices were flat month-on-month, and the CPI is expected to fall by 0.2% year-on-year in October, down 0.2 percentage points from the previous period.
The research team of CITIC Securities said that in terms of CPI, the "lard" side is expected to make a small negative contribution, but the rise in tourism prices during the "Double Festival" holiday may support the core CPI in October to exceed the historical seasonal level month-on-month. Positive and negative factors are combined, and it is expected that the CPI will still hover around 0 year-on-year.
On the other hand, the PPI may have a correction in September, with market institutions predicting the highest and lowest values of -2.4% and -2.9% respectively. Among them, 3 percent of institutions predicted that the value was -2.7%, an increase of 0.2 percentage points from the previous month's decline.
In the view of Zhang Yu, chief macro analyst of Huachuang Securities, the decline in the year-on-year reading of PPI in October was mainly dragged down by the base effect.
"From the point of view of the price of the month, although affected by the decline in crude oil and black prices, the purchase price index of major raw materials and the ex-factory price index decreased by 6.8 and 5.8 percentage points compared with the previous month; Zhang Yu expects the PPI to fall slightly from -2.5% year-on-year to around -2.7% in October.
The National Economic Research Center of Peking University said that international oil prices are mainly affected by the weakening of demand expectations and the decline in market risk appetite, which has led to the weakening of the price support of domestic industrial upstream means of production, and the price of means of living has remained stable due to the impact of the recovery of industrial demand in the middle and lower reaches, and the industrial production price has been digested by a year-on-year low shock, and it is expected that the PPI in October will fall by 2.7% year-on-year, down 0.2 percentage points from the previous period.
It is expected that the new credit in October will decline month-on-month, and the scale may increase slightly year-on-year
September credit data came in below market expectations. According to the data, RMB loans increased by 2.31 trillion yuan in September, a year-on-year decrease of 176.4 billion yuan.
The median forecast of new RMB loans in October by market institutions was 0.64 trillion yuan, down from the previous month, but a slight increase of 24.8 billion yuan from 615.7 billion yuan in the same period last year, and the lowest and highest values were 0.4 trillion yuan and 0.85 trillion yuan respectively.
Sun Binbin, chief fixed income analyst of Tianfeng Securities, said: "After entering October, the bill interest rate continued to decline, and the 3-month bill interest rate fell below 0.5%, indicating that the credit momentum in October fell significantly compared with September, and it is expected that the new credit in October will fall sharply compared with the month on September month-on-month, but with the support of resident loans and bill financing, the scale will increase slightly year-on-year." ”
The National Economic Research Center of Peking University believes that under the continuous introduction of policies such as stabilizing the economy, promoting recovery, and expanding domestic demand, especially the short-term effects of policies such as the relaxation of property market policies and interest rate cuts, the scale of credit is supported. However, it remains to be seen that the continued momentum of the property market recovery and the unstable market expectations still restrict credit expansion to a certain extent, and it is expected that new RMB loans will be 650 billion yuan in October 2023, an increase of 34.8 billion yuan year-on-year.
The sharp increase in the issuance of government bonds has formed support, and the new social financing in October may increase year-on-year
In terms of social financing, the new social financing in September was 4.12 trillion yuan, 563.8 billion yuan more than the same period last year, higher than market expectations.
Market institutions predict that the median scale of social financing in October will be 1.81 trillion yuan, an increase of 89.7 billion yuan year-on-year from 913.4 billion yuan in the same period in 2022. Among them, more than 6 percent of institutions predict that the value falls in the range of 1.5 trillion to 2 trillion yuan.
Chen Xing, chief macro analyst of Caitong Securities, said: "The net financing scale of government bonds increased significantly in October, and the year-on-year increase also expanded, and the net financing scale of corporate bonds fell from the previous month. Overall, the scale of new social financing in October may be slightly higher than that of the same period last year. ”
In the view of Cheng Qiang, chief macro analyst of CITIC Securities, the large-scale issuance of local government special refinancing bonds in October has promoted the overall net financing of government bonds to about 1.5 trillion yuan, which may increase by 1.2 trillion yuan year-on-year. Driven by government bond financing, the growth rate of social financing is expected to rebound by 0.3 percentage points to 9.3% in October.
Looking forward to the fourth quarter, Liao Zhiming, chief banking analyst of China Merchants Securities, predicted: "The sharp increase in the issuance of government bonds will support the growth rate of social finance to rise slightly. It is expected that the annual increase in social finance will be close to 36 trillion yuan, and the growth rate of social finance at the end of the year will be about 9.6%.
In October, the capital situation continued to be tight, and there was a high probability of reducing the RRR or exceeding the MLF during the year
Looking back at October, the funds rate has risen further on the basis of the high level in September, and as of October 27, the average value of DR007 in the month was 1.96%, which is above the policy rate most of the time.
In terms of interest rate bonds, the yield of 10-year treasury bonds fluctuated upward under the pressure of the "triple bearish" of improving fundamentals, continuous convergence of funds, and continuous fermentation of loose fiscal expectations. However, after the arrangement of the additional issuance of trillions of treasury bonds was implemented, the trend of interest rates tended to stabilize.
Entering November, can monetary policy continue to exert force? Will the financial situation still be tight? According to Ming Ming, chief economist of CITIC Securities, the central bank cut the reserve requirement ratio by 0.25 percentage points in September and overcontinued the MLF, with a net investment of 191 billion yuan in medium and long-term funds, reflecting that the constraints of the RMB exchange rate on the operation of RRR and interest rate cuts are not significant. Under the main goal of supporting easy credit repair, the central bank has relatively strong certainty of continuing its easy monetary orientation this year.
In addition, in addition to the supply of medium- and long-term liquidity, the PBOC has increased the injection of reverse repo funds since mid-to-late October to hedge the supply shock of special refinancing bonds. CITIC Securities expects that in the future, the central bank will also cooperate with various monetary policy tools to meet the reasonable needs of financial institutions and provide a stable and friendly liquidity environment for government bond issuance and fundamental repair.
"The central bank's attitude towards caring for liquidity is still clear, and the follow-up or will continue to adopt the method of peak shaving and valley filling to maintain the smooth operation of the capital side, and at the same time, the probability of reducing the reserve requirement ratio or exceeding the MLF within the year is relatively high." Ming Ming.
Looking forward to November, Li Yishuang, chief analyst of fixed income at Cinda Securities, said that at the end of October, the reverse repurchase balance was still at a historical high, and 850 billion MLF expired in November.
On the whole, the scale of government bond issuance in November may reach 2.44 trillion yuan, taking into account the period of 810 billion, the net financing of government bonds in November may be about 1.13 trillion yuan, a decrease of about 420 billion yuan from October, but the level is still significantly higher than the same period in previous years.
(Financial Associated Press reporter Xia Shuyuan)