2014-06-12

China Money Supply and TSF for May 2014

It is a mixed picture in May. Money supply was up, but Total social financing (TSF) five month cumulative through May 2015 is down 6% from 2013 Jan-May. For May alone, the year-on-year increase was 18.6%.

This increase is clearly seen in this monthly chart. Last year's cash crunch was kicking off in May and TSF for the May-July period was very low, which makes for easy yoy comparisons going forward.

Sub-categories declined nearly across the board; in essence the spike in bank loans rescued TSF from coming close to last May's total. Entrusted loans was the only other increased flow. Bulls can look to May loans as evidence of a pickup; bears can look to everything else and write off a possible blip in loans.

It is hard to see on the chart since bank loans distorts the scale, but foreign currency loans were actually negative ¥16.2 billion. That is the first contraction in this category since July and August 2013, when it fell ¥115.7 billion and ¥3.6 billion, respectively.

Also down were trust loans. They fell to just ¥11.6 billion, that is the lowest since a ¥3.7 billion increase in April 2012. The decline in the sector is clear. Even though bank loans increased in May, they likely didn't flow to the types of high risk borrowers serviced by the trust market.

Money supply growth ticked up as well and back in line with PBOC targets for 13% growth in M2 this year.

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