The Chinese credit data that has just been released was a bit weaker than expected but does suggest some stabilisation in credit growth. The broad credit measure total social finance (TSF), which also includes shadow finance, expanded just CNY663bn (Consensus CNY890bn, Danske Bank Markets estimate CNY700bn) in October after expanding CNY1,052bn in September. Credit expansion is usually strong in the final month of a quarter, so it is not unusual that credit expansion slowed in October. According to our calculations, seasonally adjusted growth in TSF accelerated slightly to 1.1% m/m October, from 0. 8% m/m in September and 0.9% m/m in August. Year-on-year growth in TSF continued to slow from 14.8% y/y in September to 14.5% y/y in October.
Growth in shadow finance (non-bank credit) in October eased further from 19.8% y/y to 19.0% y/y and slower growth in shadow finance has been the main driver behind the relatively sharp slowdown in credit growth over the past year. However, according to our calculations, seasonally adjusted shadow finance increased 1.4% m/m in October, after increasing just 0.4% m/m and 0.7% m/m in the previous two months. Loans from trust funds contracted for the fourth consecutive month in October but the decline slowed compared with previous months. Corporate bond issuance rebounded in October and reached its highest level since June. Corporate bond issuance has replaced trust loans as the biggest source of growth in shadow finance.
Growth in loans from banks eased in October to 12.7% y/y, from 13.0% y/y in September. Seasonally adjusted loans from banks increased 1.0% m/m for the third month in a row, so growth in bank loans also appears to have stabilised in recent months.
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