The release of financial data on Saturday was "unexpected" in terms of volume and timing. The surprise is that there were many negative values in April's financial data, among which it is particularly noteworthy that the new social finance and M1 were "double negative" year-on-year.
The "surprise" at the point in time is that the social finance data is rarely released after the cargo administration report, and the "unusual" expression of the report may be inextricably linked to today's data.
Soochow Macro believes that the "unexpected" data will more or less touch the market, coinciding with the Politburo meeting "raised" the monetary policy background, the central bank may soon ease to reduce the "negative", and the monetary policy led by the RRR cut and interest rate cut is expected to accelerate.
There is a bit of a "negative increase" in April's financial data, which can be broadly divided into three categories:
First, the negative growth of residents' loans, in April, residents' short-term loans and medium- and long-term loans both recorded a record low in the same period in history, reflecting that the willingness to borrow is still conservative under the pressure of the off-season, and the policy still needs to make full efforts to stabilize the property market and expand the consumption field.
Second, the negative year-on-year growth of M1 may be related to the suspension of "manual interest rate supplement" since mid-April. After the implementation of deposit rate management, some corporate and household deposits may shift to fixed and may also outflow, and the option of "loan repayment" is not ruled out, which may partially explain the above-mentioned sharp drawdown of retail loans and lower-than-seasonal corporate and household deposits.
Third, the negative growth of government bonds reflects the "lag" in the pace of fiscal efforts. Since the beginning of the year, the window for the issuance of special treasury bonds has been postponed, and local bonds have continued to "wait and see", resulting in a lower than expected fiscal pace, which is also the focus of the "supervision" of the Politburo meeting in April.
And these "unexpected" negative increases, in fact, have been "foreseen" in yesterday's cargo report. The first-quarter report discusses the relationship between credit growth and high-quality development in a "column" that has always been an important "column", indicating that "even if credit growth is lower than in the past, it is enough to support the economy to maintain stable growth".
However, even with the central bank's "preventive shot", the market will inevitably be touched by the "unexpected" data, so it is necessary for the central bank to reduce the "burden" through easing. Especially under the Politburo's "elevation" of monetary policy, monetary easing led by the RRR cut is bound to accelerate, and the landing window may be in mid-May at the earliest.
Specifically, the financial data for April are:
Household credit experienced the coldest April. The overall credit of the residential sector fell by 516.6 billion yuan, which is more than twice as low as in April 2022, during the fluctuating period of the epidemic. Short-term loans and medium- and long-term loans both hit record lows, and the "hot" holiday consumption in April and the continuously expanding service PMI did not "synchronize" with residents' short-term loans, which may reflect that weekday consumption was taken away by the holiday, and the whole month as a whole still tends to be "off-season"; The weaker sales of the auto market and the property market in April can explain the negative medium- and long-term loans of residents.
The total amount of corporate loans is not bad, but the proportion of bills is quite large. Of the 860 billion yuan of new corporate loans, the vast majority came from bill financing (an increase of 838.1 billion yuan), some of them came from medium and long-term borrowings of entities (410 billion yuan), and short-term loans to enterprises were a drag (a decrease of 410 billion yuan). Long-term loans to public employees are only higher than the same period in 2022 in the past five years, reflecting the start of projects and the slowdown in physical demand at the beginning of the second quarter.
Social finance rarely turned negative, and the last time was in 2005. We believe that there are two main anomalies behind the negative turnaround: first, the net financing of government bonds in April rarely recorded a negative value, which is actually a microcosm of the slowdown in fiscal rhythm since the beginning of the year. According to historical experience, when the impulse of on-balance sheet bills is large, undiscounted bank bills tend to fall, reflecting the limited demand for physical borrowing.
M1 turned negative for the first time outside the Spring Festival year-on-year, which was not only affected by the recent suspension of "manual interest supplement", but also due to the weak fiscal strength and the slowdown in project starts. On the one hand, in mid-April, the market interest rate pricing mechanism clearly prohibits manual interest rate supplementation to break through the deposit rate to absorb deposits, and after the implementation of management, it is bound to reduce corporate and resident deposits to a certain extent, and the new resident and corporate deposits below the seasonal level in April can also be seen, and the decline in corporate deposit levels will drag down the growth rate of M1. On the other hand, infrastructure and real estate projects, which have been relatively weak since the beginning of the year, have not seen a significant start at the beginning of the second quarter, coupled with the slow pace of fiscal financing, M1 growth is relatively under pressure.
Risk warning: the pace of policy introduction and the slowdown in project implementation have led to a slow economic recovery; Overseas economies entered a significant recession ahead of schedule, and domestic exports shrank more than expected.
This article is from a selection of brokerage research reports