Financial Services Association, September 5 (Reporter Xia Shuyuan) The results of the new edition of the Financial Services Association's “C50 Wind Index” show that new credit was added in August or there was a year-on-year decrease, and the acceleration of government bond issuance will form the main support for social finance. Among them, the median forecast for new RMB loans by market institutions in August was 0.91 trillion yuan, a year-on-year decrease of 0.45 trillion yuan; in addition, the median forecast for new social finance in August was 2.81 trillion yuan, of which 70% of institutions predicted more than 2.5 trillion yuan.

In terms of prices, the market expects CPI to continue to rise and the PPI decline to expand. Institutions expect CPI to rise slightly to 0.8% year on year in August, and PPI growth rate to drop or expand to -1.4% year on year. From a financial perspective, market institutions predict that funding will be slightly tight in September. In terms of monetary policy, MLF maturity and cumulative liquidity will increase. September-November may be a downgrade window. The Fed's interest rate cut also opens up room for domestic interest rate cuts.

The “C50 Wind Index Survey” was initiated by the Financial Association and completed with the participation of various research institutes in the market. The results can more comprehensively reflect market institutions' expectations on macroeconomic trends, monetary policy feelings, and financial data. Nearly 20 organizations participated in this survey.

New credit was added in August or there was a year-on-year decrease. Market institutions predicted a median value of 0.91 trillion yuan

RMB 0.26 trillion was added in July, an increase of 0.09 trillion yuan less than 0.35 trillion yuan in the same period in 2023.

Looking at the current period, credit growth may continue to slow. The median forecast of new RMB loans by market institutions in August was 0.91 trillion yuan, compared with 1.36 trillion yuan in the same period last year, or 0.45 trillion yuan less than the same period last year.

Among them, the lowest value predicted by market institutions was 0.4 trillion yuan, the highest value was 1.2 trillion yuan, and 50% of institutions predicted no more than trillion yuan.

Chen Xing, chief macro analyst at Caitong Securities, said that since late August, interest rates on notes have declined, or that credit investment is still weak. It is expected that the scale of new RMB loans added in August will still fall short of the same period last year, which continues to be a drag on social finance.

Regarding the year-on-year credit growth rate in August, and the demand for financing from residents and businesses was weak. Judging from residents' credit, real estate transactions declined somewhat in August. The estimated second-hand housing transaction area weighted -9.2% year-on-year, down 14 percentage points from the previous month. The decline in demand for home purchases dragged down residents' credit investment.

Looking at corporate loans, construction starts are still sluggish. The average cement delivery rate in August was 35.7%, down 1.5 percentage points from July, and demand for financing in the construction industry continues to be sluggish.

Accelerated issuance of government bonds forms support. 70% of institutions predict an additional social finance scale of more than 2.5 trillion yuan in August

The increase in social finance in July was 0.77 trillion yuan, while the new social finance scale in July 2023 was 0.54 trillion yuan.

It is worth noting that since the statistical caliber of corporate bond data since 2024 is adjusted according to the latest industry classification results, social finance data for 2024 and 2023 are not completely comparable.

According to the current survey, social finance is expected to continue to grow in August. The median forecast of market institutions is 2.81 trillion yuan, of which 70% of institutions forecast more than 2.5 trillion yuan.

According to Chen Xing, the issuance of government bonds accelerated in August. In particular, the monthly net financing scale of treasury bonds reached a record high. The overall net financing scale of government bonds was more than 600 billion yuan higher than in the same period last year, supporting the year-on-year increase in social finance in August.

The year-on-year CPI growth rate in August may rise slightly to 0.8%, and the PPI growth rate declined or expanded to -1.4% year-on-year

CPI rose 0.5% year on year in July, up 0.3 percentage points from June. Among them, the core CPI growth rate after deducting food and energy prices fell 0.2 percentage points year on year to 0.4%.

Looking at August, the median market forecast for CPI was 0.8%, and the forecast range of participating institutions was 0.6% to 0.9%. Among them, over 80% of institutions fell within the forecast range of 0.7% to 0.8%.

Regarding the CPI growth rate or slight increase in August, Su Jian, director of the National Economics Research Center at Peking University, analyzed that due to heavy rainfall, food prices such as pork, fruits and vegetables generally rose, compounded by the increase in summer travel, which led to a rise in related service prices.

Specifically, on the one hand, food supply has shrunk relatively due to heavy rainfall, and food prices have risen. According to agricultural and sideline product prices monitored by the Ministry of Commerce, as of August 23, pork prices had increased 7.7% month-on-month, vegetable prices had increased 19.9% month-on-month, and fruit prices had increased 5.5% month-on-month; on the other hand, August was still in the summer vacation period. As summer travel increased, some related consumer prices rose in stages.

In terms of PPI, PPI fell 0.2% month-on-month and 0.8% year-on-year in July due to factors such as insufficient market demand and declining prices for some international commodities. Both declines remained the same as in June.

According to the survey, the median PPI forecast for August was -1.4% year-on-year, with the highest forecast of -0.5% and the lowest value -1.9%, which may be difficult to correct during the year.

Regarding the PPI year-on-year reading for August, Minsheng Bank's senior management team believes that from an international perspective, global commodity prices fell first and then rose in August. First, the non-agricultural industry crashed at the beginning of the month. Concerns about the US recession rose, market risk appetite dropped sharply, and international commodity prices continued their decline since July and fell to a low point within the month on August 5. However, data on subsequent US applications for unemployment benefits, retail sales, etc. for the first time were better than expected, and concerns about the economic recession abated. Coupled with the Federal Reserve officially turning dovish at the Jackson Hole annual meeting, it led to an overall rebound in international commodity prices.

From a domestic perspective, the prices of industrial products are falling. Affected by a marked slowdown in infrastructure investment and construction, the South China Industrial Products Index declined sequentially. Among energy products, the price of natural gas continues to rise, the price of oil has turned down, and the price of coal continues to decline; in the price of ferrous metals, the price of non-ferrous metals has mixed ups and downs; among midstream chemicals, the price of cement has declined, and the price of glass has fallen. Taken together, it expects PPI to drop 0.5% month-on-month and 1.5% year-on-year in August.