Chinese analysts anticipate a bounce back in new lending to as much as 2.5 trillion yuan for the first month of 2018.
A survey of analysts conducted by Securities Daily see new lending in January rising to at least 2 trillion yuan, and year-on-year growth in the M2 money supply of 8.2%.
Lu Zhengwei (鲁政委), chief analyst for Industrial Bank, said that the start of each year usually sees higher levels of credit extension, given the mentality that early lending reaps early benefits.
In both January 2016 and January 2017 new lending as in excess of 2 trillion yuan, while total social financing for those months were 3.42 trillion yuan and 3.74 trillion yuan respectively.
Lu expects January new lending and total social financing to likely be on par with the figures for the same period a year ago given China’s ongoing deleveraging campaign, resulting in a decline in their year-on-year growth.
Lian Ping, chief economist for the Bank of Communications, is more optimistic, however, pointing out that new lending for January will at least see a marked on-month increase, given that at the end of 2017 many banks became hesitant about credit extension due to the imminent macro-prudential assessments.
Lian expects built up demand from the end of 2017 as well as standard seasonal factors to push January new loans to as high as 2.5 trillion yuan.
While lending is likely to post a sizeable on-month increase, Lian notes that fiscal expenditures from the end of last year came in beneath expectations, while tax payments are made in January, both of which are likely to have a negative impact on M2 growth.
The impact on M2 growth of bond allocations made by financial institutions in January growth is also likely to diminish.
While positive impacts come from the recent weakness in the US dollar which will reduce cross-border outflow pressure, Lian sees only a modest rebound in M2 growth to 8.5%.