20210316-兴业证券-Comments_about_China_s_Financial_Data_for_Feb._Will_Better-than-expected_Aggregate_Financing_Continue__3页_660kb

China Macro Summary: Will Better-than-Expected Aggregate Financing Continue?

Core Content

The document provides an analysis of China's financial data for February 2021, focusing on the performance of aggregate financing to the real economy (AFRE) and its implications for monetary policy and economic outlook.

Key Financial Indicators

• Aggregate Financing to Real Economy (AFRE):
  • Increased by CNY 1.71 trillion in February, exceeding the market consensus of CNY 1.07 trillion.
  • The AFRE stock rose by 13.3% year-on-year, surpassing the 13.0% increase in January.
• Broad Money (M2):
  • Grew by 10.1% in February, up from 9.4% in January.

Main Points and Analysis

• Strong Financing Demand:
  • The better-than-expected AFRE data suggests that corporate and household financing demand remained robust.
  • This may be attributed to the "staying put for 2021 Spring Festival" phenomenon, where businesses and individuals resumed activities earlier than usual.
• Loan Data:
  • New RMB loans in February reached CNY 1.34 trillion, CNY 619.8 billion more than the same period in 2020, far exceeding the market consensus.
  • Household loans: Short-term loans slightly decreased, while medium- and long-term loans increased, indicating strong demand for real estate purchases.
  • Corporate loans: Medium- and long-term loans rose by CNY 1.1 trillion, CNY 684.3 billion more than in 2020, and the proportion of such loans remained over 70%, reflecting a favorable financing structure.
• Fiscal Deposit Trends:
  • Fiscal deposits declined by CNY 847.9 billion in February, below the seasonal record of CNY 7.16 billion, suggesting the fiscal deposit release began to normalize after a prolonged slowdown since the second half of 2020.
• Monetary Policy Outlook:
  • The central bank's "stabilizing leverage" policy is expected to support the real economy in the second half of 2021 (H121).
  • However, follow-up credit policies may face contraction pressure.
  • In Q221, the economy is expected to remain robust due to export-driven growth, offering a favorable window for the central bank to resolve debt risks and prevent a rise in macro leverage.
  • The credit contraction is anticipated to begin in March as the initial surge from the Spring Festival effect fades.

Long-Term Monetary Policy Direction

• The central bank is expected to guide interest rates downward in the long run, especially if economic performance weakens.
• The current monetary policy framework has three main goals:
  1. Prevent systematic risks
  2. Normalize monetary policy
  3. Align financing costs with economic growth
• Since January 2021, the focus has shifted from risk prevention to normalization as credit risks have eased and debt problems have been resolved.
• If the economy slows, the policy may revert to a long-term goal of lowering interest rates.

Potential Risks

• Unexpected economic trends
• Unexpected monetary policy shifts

Investment Ratings

• Industry Investment Rating:
  • Overweight: Industry outperforms the market.
  • Neutral: Industry performs in line with the market.
  • Underweight: Industry underperforms the market.
• Company Investment Rating:
  • Buy: Stock price markup is more than 15% better than the market.
  • Outperform: Markup is 5% to 15% better.
  • Neutral: Markup is less than 5% better or worse.
  • Underperform: Markup is more than 5% worse.

Disclaimer and Information Disclosure

• The report is an English translation of the original Chinese version and is for informational purposes only.
• The Company (Industrial Securities Co., Ltd.) is a qualified securities investment consulting institute approved by the China Securities Regulatory Commission.
• The report is intended for clients only and not for unauthorized receivers.
• The views in the report are subject to change, and the Company has no obligation to update information to all recipients.
• The Company may have conflicts of interest due to its involvement in investment banking services, and investment decisions should not be based solely on this report.

Analyst Certification

• The analysts, Han Wang, PhD and Wang Yijun, are certified Securities Investment Consultants and Securities Analysts by the Securities Association of China.
• The report is issued independently and objectively, using prudent research methods and legitimate information.