2015-01-15

Chinese Reserves Shrink and Shadow Banks Rise

I believe the turn has been made in reserves.

China’s money supply M2 jumps 12.2 per cent but below expectations, FX reserve falls
Foreign-exchange reserve fell to US$3.84 trillion at the end of last month, compared with $3.89 trillion at the end of September, People’s Bank of China data showed. The shrinking value may be partly caused by appreciation of the US dollar against other major currencies.

Shadow banking came back from the dead in December. Is China's Shadow Banking In Quiet Resurgence?
In December, new loans surprised on the downside while total social financing (TSF) surprised on the upside. The RMB697 billion new loans figure in December is still quite robust as new loans tend to decline towards year end, and that's why year-on-year growth of outstanding loans quickened to 13.6% in December from 13.4% in November.

The breakdown of loans and TSF suggests that long-term funding for infrastructure projects surged, while banks tried to use bankers' acceptance to provide short-term credit support.

Here's the breakdown:

M2 money supply growth fell to 11% yoy, unadjusted.

TSF one month yoy growth:

TSF rolling 12-month total:

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