China’s money and credit growth likely weakened in December, says Societe Generale

China’s money and credit growth is expected to have weakened throughout the board in December. According to a Societe Generale research report bank loans are likely to have eased from CNY 795 billion in November to CNY 750 billion in December; however, the actual drop in the new lending to the non-financial sector was possibly understated by the much smaller issuance of LGBs under the swap program.

“In particular, we expect to see a more pronounced cooling impact arising from prudential measures concerning mortgage lending”, added Societe Generale.

Non-bank lending and corporate bond issuance probably decelerated markedly because of the considerably tightening of inter-bank liquidity conditions intended by the Chinese central bank. In December, almost CNY 100 billion of previously planned issuance of corporate bonds was cancelled, whereas monthly net issuance had averaged around CNY 289 billion in the year to end-November.

“Our forecast would imply a deceleration of total credit growth from 15.1 percent yoy in November to 14.6 percent yoy in December”, stated Societe Generale.