20230111-招银国际-China_Policy__Credit_growth_slowed_in_December_yet_may_rebound_in_2023_6页_660kb

China Policy Summary

Core Content

This document provides an analysis of China's credit growth trends in December and outlook for 2023, highlighting the impact of economic reopening, policy adjustments and sectoral dynamics on credit activity. It also includes investment ratings, analyst certifications, and important disclosures for different regions.

Key Findings

Credit Growth in December 2022

• New credit continued to decline in December 2022 due to temporary drops in population mobility and economic activity following the reopening.
• New mortgage, consumer credit, and short-term business loans all saw declines, as housing sales, household consumption, and business conditions remained weak.
• New medium to long-term loans to households dropped by 47.6% in December, following a 63.9% decline in November.
• New short-term loans to households were negative due to declining individual consumption before the reopening.
• Short-term loans to enterprises also declined on a monthly basis.
• Medium & long-term loans to enterprises increased by over 200%, driven by credit support to manufacturing and infrastructure investment.

Credit Outlook for 2023

• Credit growth is expected to rebound in 2023 due to reopening, credit loosening, and pro-business policies.
• New renminbi loans are projected to grow by 11% in 2023, following a 4.9% increase in 2022.
• Total social financing is expected to rise by 10% in 2023, after a 1.4% increase in 2022.
• GDP growth is forecasted to increase from 2.7% in 2022 to 5.1% in 2023.

Policy Expectations

• China is likely to maintain easing liquidity and credit policies in 2023.
• The PBOC is expected to cut RRR and LPRs by moderate amounts.
• Mortgage policies will be further eased for both first-home and second-home buyers.
• Credit conditions for the manufacturing and service sectors are expected to be very easing.
• The central bank will encourage banks to roll over debt for qualified property developers and local government financing vehicles.

Credit Market Dynamics

• Total social financing dropped 44.7% YoY in December, after a 23.5% YoY increase in November.
• Outstanding social financing growth decelerated from 10% in November to 9.6% in December.
• Off-balance-sheet credit continued to shrink due to new WMP regulation and risk aversion towards property projects.
• Corporate bond financing sharply declined as business capex weakened.
• Local government bond financing dropped as most quotas were used up in the first three quarters of 2022.

Investment Ratings

Rating	Description
BUY	Stock with potential return of over 15% over next 12 months
HOLD	Stock with potential return of +15% to -10% over next 12 months
SELL	Stock with potential loss of over 10% over next 12 months
NOT RATED	Stock is not rated by CMBIGM

Industry Rating	Description
OUTPERFORM	Industry expected to outperform the relevant broad market benchmark over next 12 months
MARKET-PERFORM	Industry expected to perform in-line with the relevant broad market benchmark over next 12 months
UNDERPERFORM	Industry expected to underperform the relevant broad market benchmark over next 12 months

Analyst Certification

• The research analyst certifies that all views expressed reflect personal opinions.
• No part of the analyst's compensation is directly or indirectly related to the specific views in the report.
• The analyst confirms that no trading or investment in the covered stocks occurred within 30 days before the report was issued, and will not occur within 3 business days after the report is issued.
• The analyst has no financial interest in the covered Hong Kong-listed companies.

Important Disclosures

• This report is not an offer or solicitation to buy or sell any security.
• CMBIGM does not provide individually tailored investment advice.
• Past performance does not indicate future performance.
• The value and returns of investments are uncertain and not guaranteed.
• The report is intended for specific recipients and may not be reproduced without prior written consent.

Regional Restrictions

• UK Recipients: This report is provided only to persons falling within Article 19(5) of the Financial Services and Markets Act 2000 or Article 49(2)(a) to (d).
• US Recipients: This report is intended solely for major US institutional investors and may not be distributed to others.
• Singapore Recipients: This report is distributed by CMBISG, an Exempt Financial Adviser in Singapore, and may be provided only to Accredited Investors, Expert Investors, or Institutional Investors.

Conclusion

The document outlines a mixed credit environment in December 2022, with declines in consumer and short-term business loans, but significant growth in medium & long-term loans to enterprises. It anticipates a rebound in credit growth in 2023 due to policy support and economic recovery. The PBOC is expected to maintain easing measures to stimulate the economy and support credit demand.