China’s credit data was above market expectations in April. Outstanding total social financing grew by 12% year-on-year last month to Rmb265.2tr, according to data published by the People’s Bank of China (PBoC) on Monday.
New renminbi loans extended to the real economy reached Rmb1.62tr in April. Outstanding renminbi loans grew by 13.1% year-on-year, faster than the 12.7% year-on-year growth in March.
“April data demonstrated the government has been quietly loosening policy, more than what it may appear by looking at the magnitude of interest rates and reserve requirement ratio cuts,” Yu Song, chief China economist at Beijing Gao Hua Securities, wrote in a Monday note.
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China’s Consumer Price Index (CPI) inflation fell to 3.3% in April from 4.3% in March. Food price inflation dropped to 14.8% from 18.3% over the same two-month period, mainly led by a decline in pork price inflation.
Producer Price Index (PPI) inflation also fell to minus 3.1% in April from minus 1.5% in March.
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China’s industrial production grew by 3.9% year-on-year in April, according to data released by the National Bureau of Statistics on Friday morning. That was a strong rebound from the 1.1% contraction in March.
Retail sales fell by 7.5% in April, but this was an improvement from the 15.8% contraction the previous month.
Property investment growth also accelerated to 7% year-on-year in April from 1.1% in March. However, fixed asset investment declined by 10.3% last month, worse than the 9.5% fall in March.
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The PBoC issued Rmb30bn of renminbi bills in Hong Kong on Thursday.
The Rmb20bn three month notes were priced at 1.77% and covered 2.29 times. The Rmb10bn one year notes were sold at 1.78% and subscribed 3.39 times, according to the tender results published by the Hong Kong Monetary Authority.
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China’s central bank has cut the reserve requirement ratio (RRR) for rural financial institutions — such as rural commercial banks, rural credit unions and county-level lenders — as well as city commercial banks that operate only within their provinces. The RRR was sliced by 50bp on Friday, and followed a similar 50bp cut last month.
The total 100bp reduction has freed up Rmb400bn for these institutions, according to the central bank.
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Also on Friday, the PBoC decided to keep the interest rate on its one-year medium term lending facility (MLF) loans to financial institutions unchanged at 2.95%. The central bank has injected Rmb100bn through this liquidity tool.
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The China Banking and Insurance Regulatory Commission (CBIRC) said it will support insurance institutions looking to increase their capital. The average comprehensive solvency ratio of 178 Chinese insurers stood at 247.7% at the end of 2019, with an average core solvency ratio of 236.8%.
Additionally, the CBIRC will help foreign reinsurance firms beef up their investments in China.
It agreed for Germany’s Hannover Re to increase the registered capital in its Shanghai subsidiary by Rmb1.56bn to Rmb4.105bn.
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Index provider MSCI will add 56 Chinese stocks, including Bilibili and China Feihe, to its Global Standard Indexes, it said on Tuesday after its May 2020 index review. It will remove 45 Chinese securities including Luckin Coffee from the index.
For its MSCI China A Index, 45 new Chinese A-shares will be incorporated and 34 will be removed. All adjustments will be effective from the close of markets on May 29.
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The size of the offshore renminbi capital pool in Hong Kong reached Rmb658bn at the end of 2019, posting a 0.1% yearly increase, according to a report published by the Financial Services Development Council this week. The average daily turnover of real time gross settlement was over Rmb1.1tr last year.
Northbound trading turnover under the Shanghai-Hong Kong and the Shenzhen-Hong Kong Stock Connects in 2019 totalled Rmb9.8tr, having grown 109% year-on-year.
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The default rate for Chinese credit bonds — or bonds sold by corporates and financial institutions — was 0.22% in April. This was 0.08 percentage points lower than in March, according to a report by the China Central Depository and Clearing Co.
The report said there were nine new defaulted bonds or bonds with extended payments in April, worth Rmb5.55bn.
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Industrial and Commercial Bank of China has signed a deal with the Hubei provincial government, according to a statement from the bank on Thursday.
The state-owned bank agreed to offer at least Rmb300bn in funding in the next two years to support local developments.
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Thirty-five listed Chinese securities houses saw an average increase of 119% in their net profits in April, according to a report from China International Capital Corp.