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China new bank loans tumble more than expected last month

Chinese banks extended $101 billion in new yuan loans in July, less than a quarter of June’s amount and falling short of analysts’ expectations

New bank lending in China tumbled more than expected in July while broad credit growth slowed, as fresh COVID flare-ups, worries about jobs and a deepening property crisis made companies and consumers wary of taking on more debt.

Chinese banks extended 679 billion yuan ($101 billion) in new yuan loans in July, less than a quarter of June’s amount and falling short of analysts’ expectations, data released by the People’s Bank of China (PBOC) on Friday showed.

“Credit growth dropped back last month, with property market jiters weighing on bank lending,” Capital Economics said in a note. “It may continue to disa ppoint in th e ne a r-te rm give n th a t se ntime nt among homebuyers is likely to stay weak and government borrowing is on course to slow.” Analysts polled by Reuters had predicted new yuan loans would fa ll to 1.10 trillion yua n in July, ve rsus 2.81 trillion the previous month and 1.08 trillion a year earlier.

Household loans, including mortgages, fell to 121.7 billion yuan in July from 848.2 billion in June, while corporate loans slid to 287.7 billion yuan from 2.21 trillion.

China’s economy slowed sharply in the second quarter as widespread lockdowns hammered demand and business activity, while the property market has lurched from crisis to crisis.

Ch ina ’s top le a de rs re ce ntly signa lle d th e y we re prepared to miss the government growth target of around 5.5% for 2022, which analysts said had been looking increasingly unatainable.

The PBOC reiterated it would step up implementation of its prudent monetary policy and keep liquidity reasonably ample, while closely monitoring domestic and external inflation changes, it said in its policy report.

But few China watchers now expect cuts in benchmark lending rates, which could raise the risk of capital flight as other major central banks sharply raise rates to batle surging inflation.

In the real estate market, a growing number of homebuyers have threatened to stop repaying mortgages on hundreds of stalled projects. While regulators have urged banks to help provide funds to fill developers’ funding gap, confidence in the sector remains fragile.

Data firm China Beige Book International, which conducts monthly surveys of more than 1,000 firms, said there was a clear drop in credit demand in July from manufacturing and services firms, with a slight increase in retail, which it atributed largely to fears of more lockdowns.

Some analysts point to a recent glut of liquidity in interbank money markets as a further sign of weaker credit demand.

Broad M2 money supply grew 12% in July from a year earlier, the central bank data showed, above estimates of 11.4% in the Reuters poll.

Outstanding yuan loans grew 11% compared with 11.2% growth in June. Analysts had expected growth unchanged from June.

Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, slowed to 10.7% in July from 10.8% in June.

T sf includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.

In July, TSF dipped to 756.1 billion yuan from 5.17 trillion in June. Analysts polled by Reuters had expected July TSF of 1.30 trillion yuan.

Local governments issued a net 3.41 trillion yuan in special bonds in the first six months - part of the 2022 special bond quota of 3.65 trillion, finance ministry data showed, as authorities sought to quicken infrastructure spending.

Sources have told Reuters that China plans to bring forward some 2023 local special bond quot as to the fourth quarter.

HUOBI GROUP: The founder of China’s Huobi Group, which runs one of the world’s largest cryptocurrency exchanges, is in talks with investors to sell his almost 60% stake in the exchange for over $1 billion, Bloomberg News reported on Friday.

Leonli’s stake sale would value Huobi between $2 billion and $3 billion, and could be completed as soon as the end of the month, the report said.

T ron founder justin sun and sam bank man- fri ed’ s FTX are among those who have been in contact with Huobi regarding the proposed stock sale, the report added, citing people familiar with the mater.

A spokesperson for Huobi confirmed to Bloomberg that li was engaging with several international institutions about the sale, but declined to offer specifics, while Tron’s Sun told the news agency that he hasn’t had any negotiations with Li about a sale.

Huobi Group, Tron and FTX did not immediately respond to Reuters requests for comment.

The Chinese group’s crypto exchange stopped new registrations of accounts by mainland China customers last year ater Beijing introduced a blanket ban on all cryptocurrency trading and mining in the country.

Meanwhile, cry pt op layers globally also ran into difficulties following a sharp selloff in markets that started in May.

The market conditions reflected in the results of rival exchange Coinbase Global, which reported a larger-than-expected quarterly loss this week as investors worried by this year’s rout in risky assets shied away from trading in cryptocurrencies.

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2022-08-14T07:00:00.0000000Z

2022-08-14T07:00:00.0000000Z

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