matter:
In November 2021, China's social financing scale was 2.61 trillion yuan, new RMB loans were 1.27 trillion yuan, and M2 money supply increased by 8.5% year-on-year.
Ping An View:
Direct financing drives the recovery of social finance. In November, the stock of social finance increased by 10.1% year-on-year, a slight increase of 0.1 percentage points over the previous month. The main drag factors on the growth of social finance in November were on balance sheet loans and trust loans: the weak demand for loans is a big drag on the "wide credit". The transition period of new asset management regulations is coming to an end, and the fast pace of pressure drop of trust loans has become another drag. The supporting factors are mainly government bonds, corporate bonds and stock financing of non-financial enterprises. The accelerated issuance of local special bonds has a prominent pulling effect on social finance, and the net financing amount of urban investment bonds is also large; Although the net repayment of real estate bonds has ended since July, it is still dominated by borrowing new to repay the old.
The demand for effective loans of enterprises is weak. In November, the loan stock increased by 11.7% year-on-year, 0.2 percentage points lower than that of the previous month. Among them, households show the characteristics of increase in medium and long-term loans and decrease in short-term loans, which is not only related to the accelerated promotion of real estate mortgage loans, but also reflects the weak consumption will of residents, and the seasonal consumption boost effect of "double 11" is weak. The short-term and medium and long-term loans at the enterprise end are weak, and the increment mainly comes from bill financing, reflecting the insufficient financing demand of the real economy. Banks may offset the credit line with the amount of bills.
The growth gap between M2 and social finance increased slightly. In November, M2 fell by 0.2 percentage points year-on-year to 8.5%, which widened the difference with the growth rate of social finance. Fiscal deposits and deposits from non banking financial institutions are the main drag on the downward growth of M2. This reflects that after a large number of local government special bonds were issued in October, the expenditure on relevant projects increased in November, or it means that local special bonds began to accelerate the formation of physical workload at the end of the year. The deposit pressure drop of non bank financial institutions reflects that the retention of funds in the financial system may be alleviated to some extent. In November, M1 increased by 0.2 percentage points year-on-year to 3.0%, rebounding after nine consecutive months of decline. With the accelerated expenditure of Financial deposits and more smooth direct financing of enterprises, the shortage of cash flow in non-governmental departments has been alleviated. However, from the absolute level, the M1 growth rate is still at the absolute low level in recent five years, and the cash flow situation of the enterprise sector still needs to be improved.
To sum up, the marginal improvement of social finance growth in November was mainly due to the initial appearance of the "policy bottom" of real estate and the improvement of local government financing. From the accelerated release of Financial deposits, it can also be seen that local special bonds began to accelerate the formation of physical workload. However, the problems of weak demand for effective loans by enterprises and insufficient consumption willingness of residents are further highlighted, and there are still many obstacles to "stabilizing credit". Since December 2021, the China Banking and Insurance Regulatory Commission (CIRC) has stated that "real estate development loans and M & A loans should be issued reasonably", and the central bank has comprehensively reduced the reserve requirement and lowered the interest rate for supporting agriculture and small loans, which should be the policy overweight based on the weak loan demand. As inflation constraints begin to weaken, the central bank may expect further easing of monetary policy after the second comprehensive RRR reduction in the year.
