The new-than-expected decline in the scale of new social financing in July has triggered heated discussions on the financing environment and monetary policy in the market.
According to data released by the People’s Bank of China on August 11, the scale of new social financing in July was 1.06 trillion, a year-on-year increase of 632.8 billion. The year-on-year growth rate of social financial stocks was 10.7%, a decrease of 0.3 percentage points from June.
Although July is the seasonal off-season for credit release, the 1.06 trillion yuan of new social financing is still significantly lower than the 1.5 trillion yuan expected by the market.
Why did it fall beyond expectations?
Local government debt has become the most important drag on social financing. In July, new government bond financing was 182 billion yuan, a decrease of 569 billion yuan from the previous period.
Industrial Securities pointed out that the issuance of government bonds has been significantly slower than seasonally. From a historical perspective, July is often the peak period for government bond issuance. Increased government bond issuance accounted for only 2.5% of the annual government bond issuance target, which was significantly slower than the seasonally regular 15.7%. At the same time, new fiscal deposits amounted to 600.8 billion yuan in July, and the rate of decentralization was significantly slower than seasonally.
Everbright Securities pointed out that the sharply lower than expected increase in social financing was mainly due to the optimism of undiscounted bills.
” The reason why the market is optimistic about the increase in undiscounted bills in July is mainly due to the abundant liquidity after the RRR cut in July, and the reduction in the re-discount rate of the state-owned stocks To a lower level, it is speculated that lower interest rates will stimulate corporate billing demand, and there is a possibility of idling funds. However, judging from the actual data performance, the acceptance amount of silver bills in July was 1.77 trillion, an increase of 176 billion from the same period last year. However, due to the large number of invoices issued in the same period last year, there was a concentrated maturity situation in July this year, which caused a decrease in the stock of bills, which exacerbated the contradiction between supply and demand of bills.” The agency pointed out.
Has the social finance bottomed out?
Although the issuance of local government bonds will accelerate in the future, there are still different opinions on whether the market has bottomed out in social financing.
China Securities Investment believes that social financing has bottomed out. With the Politburo meeting at the end of JulyAfter setting a more proactive fiscal policy and faster local government bond issuance in the second half of the year, it is expected that government bond issuance will increase significantly, supporting the overall growth of social finance. It is expected that in the subsequent months of this year, social financing will show a trend of upward growth and structural optimization.
CITIC Securities believes that the issuance of local government bonds will be substantially accelerated in the future. This year, the local government bond issuance is likely to use a full annual increase in the quota, August, September, and December. The monthly net financing pressure of government bonds may increase significantly. The net financing of local government bonds in a single month may exceed 700 billion yuan; RMB loans have more room for development, and the active fiscal effort will drive infrastructure and other economic support to stimulate entities’ financing Banks can also obtain more high-quality projects. In addition, increased policy attention to green tools, small and micro enterprises, and regional coordinated development is expected to drive the growth of credit provision under the above-mentioned concept. New RMB loans are expected to exceed 20% throughout the year. Trillion yuan. Superimposed on the previous considerations of nominal economic growth and macro leverage ratio, it is expected that the social finance will fall from 11.0% to 11.5% year-on-year at the end of the year.
GF Securities predicts that from the local government bond issuance plan disclosed in some provinces from August to September, subsequent local bond issuance will accelerate and the maturity scale of national bonds will also decline. Government bond financing will accelerate. However, August-September last year was also the largest month of government bond issuance, and the monthly financing scale was more than one trillion yuan. Even if the incremental performance improves, the short-term pull effect on the growth of social financial stock may be limited.
Ping An Securities pointed out that the growth rate of social financial stocks in July returned to the end of 2019 level, which perfectly reflects the central bank’s “monetary policy in the first half of the The intensity has basically returned to the normal state before the epidemic”. Although the growth of social finance is still stable from the two-year average of last year and this year, if we look at the policy convergence between this year and next year, there is still room for the growth rate of social finance in the third quarter to fall further (maybe below 10%). This makes a tight economic environment possible early next year, which is not conducive to ensuring a good start and a good start for the “14th Five-Year Plan”. This is an important reason why the central bank cut the RRR in July beyond expectations, and it also established the main tone of loose monetary policy in the second half of the year.