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May 31, 2013
Flash: China Credit Growth likely to slow on falling bond issuance - Nomura
FXstreet.com (Barcelona) - Nomura economist, Zhiwei Zhang notes that according to the China Securities Journal, corporate bond issuance dropped to RMB275bn in May from RMB449bn in April.
He comments that net bond issuance accounts for 10% of total social financing (TSF) and rose by 114% y-o-y in April, while TSF grew by 81%. Bill financing, another important part of TSF, also likely weakened in May. He writes, “This reinforces our view that credit growth peaked in Q1 and will drop in Q2. Total social financing may fall further from the April level of RMB1.7trn (March: RMB2.5trn) and we expect economic growth to trend down to 7.5% in Q2 from 7.7% in Q1.”
He comments that net bond issuance accounts for 10% of total social financing (TSF) and rose by 114% y-o-y in April, while TSF grew by 81%. Bill financing, another important part of TSF, also likely weakened in May. He writes, “This reinforces our view that credit growth peaked in Q1 and will drop in Q2. Total social financing may fall further from the April level of RMB1.7trn (March: RMB2.5trn) and we expect economic growth to trend down to 7.5% in Q2 from 7.7% in Q1.”