Financial Services News, November 6 (Reporter Xia Shuyuan) The results of the new edition of the Financial Services Association's “C50 Wind Index” show that new credit was added or weak in October, and the growth rate of social finance declined slightly. Among them, the median forecast for new RMB loans added in October was 0.58 trillion yuan, a year-on-year decrease of 0.16 trillion yuan; in addition, the median forecast for new social finance in October was 1.47 trillion yuan, a year-on-year decrease of 0.38 trillion yuan. Of these, 80% of institutions predicted that the cumulative year-on-year growth rate of social finance would be less than 8%.

In terms of prices, the market expects CPI to fall month-on-month, with year-on-year readings remaining flat; PPI declines month-on-month, and year-on-year readings have improved. Specifically, market institutions forecast the median CPI for October to be 0.4%, and the year-on-year decline in PPI may narrow to -2.5%. From a financial perspective, market institutions believe that under a supportive monetary policy approach, it is expected that the central bank will still have plenty of room to expand its statement. On the basis of conventional pledged reverse repurchase operations, various tools such as downgrading, treasury bond trading, and buyout reverse repurchase operations will be used comprehensively to balance capital supply and demand in the banking system, and maintain reasonable and abundant liquidity for short, medium, and long periods.

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.

Credit investment may be tight in October, with market institutions predicting a median value of 0.58 trillion yuan

RMB 1.59 trillion was added in September, a year-on-year decrease of 720 billion yuan, slightly lower than market expectations.

Looking at the current period, credit investment may be tight in October. The median forecast for new RMB loans by market institutions was 0.58 trillion yuan, a decrease of 0.16 trillion yuan compared to the level of 0.74 trillion yuan in the same period last year. Among them, market institutions forecast the lowest value of 0.3 trillion yuan and the highest value of 0.75 trillion yuan.

Regarding the new credit added or weak in October, Liao Zhiming, chief fixed income analyst at Huayuan Securities, said that at the end of October, 1M and 3M rediscount interest rates were close to zero, reflecting the weak credit investment situation in that month.

“We expect to add new loans in October. Note financing and non-bank interbank loans account for a relatively high proportion of the incremental volume. Although loans to repurchase or increase holdings were implemented in October, the scale is still small and not enough to significantly affect credit data.” Liu Zhiming said. In his view, the M2 growth rate has declined since 2024, mainly due to weak financing needs in the real economy, and the decline in loan growth has led to a slowdown in the growth of the banking system's subsistence payments.

It is worth noting that in response to the “white list” of 4 trillion real estate and the recovery in real estate sales, Yang Fan, chief macroeconomic and policy analyst at CITIC Securities, said, “Although real estate sales rebounded in October, there may be a certain time lag leading to residents' loans.”

According to reports, as of October 16, the loan amount for the real estate “white list” project approved by commercial banks reached 2.23 trillion yuan. The industry expects that by the end of 2024, the loan approval amount for “white list” projects will double, exceeding 4 trillion yuan, that is, the increase in November-December may be around 2 trillion yuan.

In addition, according to data from the Ministry of Housing and Construction, in October, the country's newly built commercial housing online sales increased 0.9% year on year, up 12.5 percentage points year on year from September, achieving growth for the first time since falling for 15 consecutive months in June last year; the total number of newly built commercial housing and second-hand housing transactions increased 3.9% year on year, for the first time since falling for 8 consecutive months in February this year.

The growth rate of social finance may decline slightly in October. 80% of institutions predict that the scale of new social finance will be less than 1.8 trillion yuan

The increase in social finance in September was 3.76 trillion yuan, while the new social finance scale for the same period in 2023 was 4.12 trillion yuan.

According to this survey, the median forecast for the scale of social finance added by market institutions in October was 1.47 trillion yuan, a decrease of 0.38 trillion yuan compared to 1.85 trillion yuan in the same period last year, and the forecast range of participating institutions was 1.1 trillion yuan to 1.88 trillion yuan. It is worth noting that 80% of these institutions predicted that the scale of new social finance added in October would be less than 1.8 trillion yuan, and the cumulative year-on-year growth rate of social finance would be less than 8%.

Regarding the year-on-year decrease in the scale of social finance added in October, industry insiders believe it was mainly hampered by government bond financing in that month.

Chen Xing, chief macro analyst at Caitong Securities, said, “The issuance of government bonds slowed in October, and the centralized issuance of special refinancing bonds rose in the same period last year. The overall net financing scale of government bonds this month increased less than in the same period last year, while the net financing scale of corporate bonds increased in October, but overall, social finance may have maintained a small increase over the same period last year.”

According to reports, the net financing amount for Wind-caliber government bonds in October was 930 billion yuan, and the net financing amount for corporate bonds was 0.16 trillion yuan.

The CPI may have remained flat in October, and the year-on-year decline in PPI may narrow to -2.5%

CPI rose 0.4% year on year in September, down 0.2 percentage points from August. Excluding food and energy, the core CPI growth rate fell 0.2 percentage points to 0.1% year on year, hitting a new low since March 2021.

Judging from the year-on-year reading, market institutions forecast the median CPI for October to be 0.4%, and the forecast range is 0.2% to 0.6%. It is worth noting that 60% of institutions' predictions fell within 0.4%-0.5%.

According to Yi Yi, chief macroeconomist at Huatai Securities Research Institute, there was a marked increase in pig supply in October, and overall food prices fell. Pork and vegetable prices fell 7% and 6.6% month-on-month, respectively, and cotton prices rose 3.3% month-on-month. At the same time, the expansion of fiscal spending is helping government consumption to pick up, and the overall CPI is expected to be stable.

In terms of PPI, the year-on-year decline in PPI increased to 2.8% in September due to factors such as fluctuations in international commodity prices and insufficient effective demand in the domestic market.

According to the survey, the month-on-month decline in PPI in October may have subsided, and the year-on-year readings improved. The median forecast for PPI for October was -2.5%, the lowest value was -2.8%, and the highest value was -2.1%.

Regarding the narrowing of PPI's month-on-month decline and the year-on-year improvement in readings, Chen Xing said, “Since October, the prices of copper, aluminum, steel and crude oil have all rebounded. Stimulated by a package of incremental policies, the economy is gradually recovering.”

According to reports, driven by policy expectations, black commodity prices rebounded sharply in October. Thread, iron ore, and coke were 7%, 10%, and 8.2% month-on-month; prices of non-ferrous metals continued to rebound, with copper and aluminum rebounding 3.2% and 5.9% month-on-month. Among them, geographical problems in the Middle East have once again boosted crude oil prices. Crude oil prices were 3.2% month-on-month in October. “Overall, considering the impact of the base effect, PPI is expected to record -2.5% year-on-year in October,” said Lu, the chief economist of Industrial Bank.