Event: China's social financing scale increased by 4650 billion yuan in March, with an expected 3629 billion yuan. The stock of social finance increased by 10.6% year-on-year, compared with the previous value of 10.2%. M2 increased by 9.7% year-on-year, expected to be 9.1%, and the previous value was 9.2%.
Comments:
The new social finance in January and March was significantly higher than expected, and the growth rate was also higher, reflecting the acceleration of China's credit supply. In March, social finance increased by 4650 billion yuan, significantly higher than the expected value of 3629 billion yuan; The year-on-year growth rate was 37.7%, which was significantly higher than the previous value of - 30.8%; The three-year average growth rate was 16.2%, and the growth rate was also significantly higher than the previous value of 7.3%, which was also significantly higher than the growth rate of nominal GDP. This shows that China's credit investment has accelerated significantly and the investment intensity is also strong. From the perspective of sub indicators, there are three reasons for the rapid growth of new social finance: first, the rapid growth of RMB loans, an increase of 481.7 billion yuan year-on-year; Second, the net financing of government bonds increased rapidly, with an increase of 392.1 billion yuan year-on-year; The non discounted bank loans increased by more than 1538.2 billion yuan year-on-year, with a year-on-year increase of more than 2.52 billion yuan. The year-on-year increase in trust loans is not a further increase in the balance of trust loans, but a decrease lower than that in the same period last year, which may be because financial institutions have slowed down the rate of off balance sheet financing in order to promote the steady growth of social finance. In March, the stock of social finance increased by 10.6% year-on-year, with an average growth of 11.45% in three years. The growth rate rebounded by 0.1 percentage points, which also reflects the acceleration of credit supply.
The growth of new RMB loans accelerated in February and March. Although there is still room for improvement in the loan structure of non-financial enterprises, the growth of medium and long-term loans has accelerated significantly, reflecting the increased financial support for the real economy. In March, RMB credit increased by 3130 billion yuan, an increase of 400 billion yuan year-on-year, with a year-on-year increase of 14.7% (previous value - 9.6%), and an average increase of 22.8% (previous value 11.6%) in three years. The growth rate was significantly higher than the previous value, reflecting the accelerated growth of RMB loans. In terms of sub items, loans from non-financial enterprises reached 248 billion yuan, an increase of 880 billion yuan year-on-year, an increase of 55.0% (the previous value was 3.3%), and an average increase of 32.5% (the previous value was 14.1%) in three years. The growth rate was much higher than the previous value, reflecting the increased financial support for the real economy; Resident loans amounted to 753.9 billion yuan, a year-on-year increase of - 34.3% (the previous value was - 337.1%), with an average increase of - 5.4% over the three years, and the decline was significantly narrowed; Bill financing was 318.7 billion yuan, an increase of 471.2 billion yuan year-on-year, indicating that the credit structure still needs to be improved.
3. The decline of residents' medium and long-term loans narrowed significantly, reflecting that the relaxation of real estate market policies began to take effect. It is expected that in the future, the property market policy will continue to be gradually relaxed due to the implementation of urban policies, so as to promote the recovery and growth of residents' medium and long-term loans. In March, the medium and long-term loans of residents increased by 373.5 billion yuan (the former value was - 45.9 billion yuan), a year-on-year increase of - 40.1% (the former value was - 111.2%), and the decline was significantly narrowed. Compared with 2019, residents' medium and long-term loans decreased by an average of 6.7% in three years in March, which is still weak. At present, the national weighted average mortgage interest rate is about 100bp higher than the five-year LPR. Considering the low risk of housing loan, the interest rate of housing loan can be lowered to the level of 5-year LPR, or even slightly lower than 5-year LPR. Therefore, there is more room for China's mortgage interest rate to fall. Of course, there are great differences in mortgage interest rates in different cities. For example, the mortgage interest rate in Shanghai is low, which is basically the same as the five-year LPR. Therefore, the reduction of housing loan interest rate is mainly realized by reducing the housing loan interest rate due to urban policies. Cities with low housing loan interest rate (such as Shanghai) will not reduce the housing loan interest rate. Local governments are concerned that the relaxation of policies will stimulate real estate speculation. It is likely that the real estate market policy will not be greatly relaxed at one time, but gradually relaxed. It is expected that the relaxation of property market policies in the future will promote the recovery and growth of residents' medium and long-term loans.
4. We maintain our judgment that the probability of future interest rate cuts is small, and the marginal easing of monetary policy is still dominated by "wide credit". The recent epidemic in China has significantly increased the inhibition on the economy, and the government has begun to strengthen efforts to stabilize growth. On April 6, the national standing committee said that we should make timely and flexible use of various monetary policy tools such as refinancing, give better play to the dual functions of aggregate and structure, and increase support for the real economy. Specific measures include increasing small re loans for supporting agriculture and establishing two special re loans for scientific and technological innovation and inclusive pension, focusing on "wide credit". At present, China's policy interest rate has been low, and there is little room for interest rate reduction. Overseas interest rate increases also have certain constraints on China's interest rate reduction. China can also promote the steady growth of real estate and related industries by reducing mortgage interest rates and increasing points, so there is little need to cut interest rates. On the whole, we believe that the probability of interest rate reduction in the future is small.
Risk factor: monetary policy is greatly relaxed or tightened
