New Chinese Lending Expected to Breach USD$152 Billion Threshold in August

Chinese analysts expect new lending to reach 1 trillion yuan (USD$152.67 billion) for August on the back of improving confidence and robust growth in consumer loans.

A survey by stcn.com found that analysts expect seasonal factors, improvements to  China’s supply-demand structure and increasing confidence amongst large and medium-sized enterprises to push new lending past the 1 trillion yuan threshold in August.

Based on first-half changes to the balance sheets of listed banks, analysts expect new lending to be dominated by household mortgages and and medium-to-long term loans to enterprises, while consumer loans will continue to maintain their highest growth levels since the start of the year.

Analysts also expect seasonal factors to boost lending in August, which is typically 200 billion yuan ahead of July when it comes to new credit extension.  Official data indicates that new lending in July was approximately 825.5 billion yuan.

Huachuang Securities fixed-income analyst Qu Qing said to stcn.com that in addition to breaching 1 trillion yuan in August, he expects fresh credit extension in China to undergo further structural improvement.

“Looking at the July data we can see that the share of medium and long-term loans is on the rise,” said Qu.

“Demand for finance in the overall real economy is still flourishing, which is reflected in comparatively strong endogenous drivers of growth.

“Since the start of August, following an increase in manufacturing activity, loans could post further increase.”

Lending to corporations surged in the first half of 2017, on the back of efforts by regulators to stymie China’s burgeoning shadow banking sector as well as clamp down on capital markets.

Data from Wind Information indicates that 3,268 non-financial listed companies in China raised a total of 6.53 trillion yuan during the first half of 2017, for only a modest percentage change compared to the figure of 6.52 trillion yuan for the same period last year.

The sources of financing have changed significantly, however, with the use of bank loans surging at the expense of equity financing and debt issuance.

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