FxWirePro: Daily Commodity Tracker - 21st March, 2022 
The People’s Bank of China (PBOC), released its monetary data for the first half of 2016. In the month of June, new yuan loan recovered to RMB 1.38 trillion from May’s RMB 985 billion. It is quite higher than the market expectation of RMB 1 trillion. The total outstanding RMB loan rose 14.3 percent year-on-year to RMB 101.49 trillion.
Household loans account for 52 percent of the total new loans. Meanwhile, loans extended to non-FI entities, such as corporates and other entities, contributed 44 percent to the total loan growth, rebounding to RMB 609 billion.
Similarly, total social financing data (TSF) came in at RMB 1.63 trillion, stronger than projections of RMB 1.1 trillion. Bank loans accounted for 80 percent of the monthly TSF. Meanwhile, the corporate bond net issuance recovered to RMB 218 billion in June from May’s –RMB 39 billion.
The M1 money supply continues to increase more rapidly than the M2 money supply. M2 rose 11.8 percent year-on-year that is lower than the central bank’s target of 13.1 percent. M1 rose sharply by 24.6 percent, implying a rapid rise in corporate demand deposit than time deposit.
Mortgage loans mainly drive the loan growth, reflecting the boom in housing market. The household loan has risen 51 percent year-on-year as compared to the first half of 2015. Meanwhile, cash hoarding by China’s coporates hints at weak growth outlook.
The divergence between M1 and M2 growths rose further. This shows that the corporates prefer to hold cash, noted ANZ in a research report. This is in line with the declining trend of fixed asset investment by the private sector, according to ANZ.
The market has been factoring the declining expectation for additional monetary policy easing, implying that the data should not have a solid impact on the market. The deceleration of growth outlook and the risk-off sentiment in the medium term, related to global uncertainty and rising credit risks are expected to mainly drive the sovereign bond yields, said ANZ.
