Shenwan Hongyuan macro
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Credit: Bill financing was barely supported, household credit contracted again after a month, and medium and long-term loans of enterprises fell back to normal, reflecting the characteristics of "credit growth has been transformed from supply constraints to demand constraints" in the 24Q1 goods administration report. In April 2024, credit increased by 730 billion, which was basically in line with market expectations (743.3 billion), but the structure was more supported by bill financing, with a record high of 838.1 billion yuan in a single month, an increase of 710.1 billion yuan year-on-year. Residents' credit demand rebounded again, with a monthly increase of -516.6 billion, a year-on-year decrease of 275.5 billion, consistent with the low level of real estate sales. In terms of medium and long-term loans to enterprises, 410 billion yuan was added in April, a year-on-year decrease of 256.9 billion yuan, returning to the normal seasonal level, which may be due to the slow fiscal financing and the simultaneous slowdown of infrastructure-related loans. Corporate short-term loans (an increase of -410 billion, a year-on-year decrease of 300.1 billion) showed a significant contraction due to the siphoning of bill financing. In addition, the growth of non-bank loans (an increase of 260.7 billion yuan, an increase of 47.3 billion yuan year-on-year) also helped credit to be relatively stable.
Social finance: The progress of government bond financing has been slow, the undiscounted bills have contracted, and the total amount of social financing has declined due to the decline in corporate bonds. In April, the new social finance was -198.7 billion, a year-on-year decrease of 1,423.6 billion, mainly due to three parts. First, government bond financing (an increase of -98.4 billion, a year-on-year decrease of 553.2 billion), the net financing progress of government bonds from January to April was 14.1%, significantly weaker than the average of 19-23 years (23.7%); Second, undiscounted bills of exchange (new -448.6 billion, a year-on-year decrease of 314.1 billion), may also be due to the amount of bill discounting, and the relatively abundant short-term funds of enterprises bring about a substitution effect; Third, corporate bonds (an increase of 49.3 billion, a year-on-year decrease of 244.7 billion) were cold again after a lapse of three months, and the impact of localized bonds on corporate bonds was further revealed. Entrusted loans (an increase of 9 billion, a year-on-year decrease of 700 million) and trust loans (an increase of 14.2 billion, an increase of 2.3 billion year-on-year) were basically the same, and there was no additional increase in monetary policy.
M2: 7.2% year-on-year was lower than expected, and the mechanism of "loans to create deposits" was also applicable in the loan contraction stage, which was first reflected in the corporate sector, while the decline in household deposits was not due to consumption and investment, but mainly reflected in the decline in deposits and loans. M2 in April was 7.2% year-on-year, down 1.1 percentage points from the previous month, lower than market expectations (8.3%, Wind). Among them, the weakening of deposits in the corporate sector (-1,872.5 billion yuan, a year-on-year decrease of 1,731.7 billion yuan) is the main source of M2 decline, which is also reflected in the change in M1 (-2.5pct to -1.4%). In the past, the path of "loan to create deposits" has changed to "loan contraction leads to deposit contraction", and considering that enterprises are the main force of credit expansion, this process may be the first to be reflected in corporate deposit data. Household sector deposits (-1.85 trillion yuan, a year-on-year decrease of 650 billion yuan) fell significantly more than the pre-pandemic level, but given the changes in corporate deposits and the simultaneous decline in household loans, household deposits are more likely to repay debts than consumption. Fiscal deposits (an increase of 98.1 billion yuan, a year-on-year decrease of 404.7 billion yuan) are not a direct factor for the weakening of M2, but may be the marginal support of M2 in April.
The weakness of the financial data in April, combined with the Financial Times' report on the "squeezing of water" in monetary and credit data, may be partly due to this. However, the duration of the impact of this process on financial data is uncertain, and according to the report, "the disruption to money and credit growth is expected to be concentrated in the second quarter and continue to have an impact in the second half of the year." "The relationship between financial data and economic growth may be disrupted in the coming years, and we recommend paying more attention to the directional guidance of economic growth prospects brought about by real data. Aside from the above part of the impact, the problems reflected in the social finance still need to be solved at an accelerated pace, especially in the process of credit "squeezing water" and preventing capital idling, the expansion of social credit needs to be undertaken by a department, which may need to rely more on finance.
Risk warning: the pace of steady growth policies is slower than expected, and the real estate market situation changes.
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The content is excerpted from Shenwan Hongyuan's macro research report:
How to understand the new social financing turning negative? -- Quick Review of Financial Data in April
Securities Analyst: Jia Dongxu Tu Qiang Wang Sheng
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