Macro Research: Fiscal year-on-year tightening narrowed and M2 rebounded

Original title: Macro research: fiscal year-on-year tightening narrowed to promote M2 rebound

May financial data review

New social financing in May was slightly lower than market expectations, but the year-on-year growth rate of new RMB loans and M2 exceeded expectations. The year-on-year increase in M2 was due to the year-on-year decline in fiscal deposit growth and the marginal drive of potential foreign exchange inflows.currencyExpansion-Under a high base, the year-on-year growth rate of social financial stock in May fell from 11.7% in April to 11.0%, but the month-on-month growth rate rose from 7.6% to 8.8% after the seasonal adjustment. At the same time, the year-on-year growth rate of M2 in May rose slightly from 8.1% in April to 8.3% (Bloomberg consensus: 8.1%), and the year-on-year growth rate of M1 fell slightly by 0.1 percentage point to 6.1%. In May, new social financing was 1.92 trillion yuan, slightly lower than Bloomberg’s consensus estimate of 2.0 trillion yuan. In terms of breakdown, the reasons for the year-on-year decrease in new social financing and the year-on-year growth rate of M2 exceeding market expectations are as follows: 1) The year-on-year decrease in new social financing in May was mainly due to the month-on-month decline in the balance of “non-standard” assets and corporate bonds. The year-on-year decline in net financing of government bonds reflects the continued impact of the decline in fiscal support and the accelerated “stratification” of credit. 2) However, the year-on-year growth rate of M2 was higher than market expectations as the year-on-year growth rate of fiscal deposits under the high base and the pressure on foreign exchange inflows rose.

Analysis conclusion: As predicted in our mid-term strategy for 2021, as the period of the largest year-on-year fiscal policy tightening (February to May this year) has gradually passed, the money supply and the quarter-on-quarter growth rate of social finance have gradually stabilized and rebounded. We reiterate that the quarter-on-quarter growth of M2 and social financing may bottom out in the second quarter of 2021, while the fourth quarter year-on-year growth may stabilize or even rebound slightly. As analyzed in our mid-term strategy report “Controllable Inflation Transmission and “Passive” Adjustment of Macroeconomic Policy” released on May 30, “fiscal leading currency” means that year-to-date fiscal policy tightening year-on-year is a drag on the base currency and social finance. The main factor behind the slower-than-expected slowdown. With the high base factor of fiscal expansion gradually disappearing from June, and the marginal weakening of external demand support in the fourth quarter, we expect fiscal policy tightening in the third quarter to be less than that in the second quarter, and the fiscal deficit in the fourth quarter may expand slightly year-on-year. In terms of social finance, the year-on-year growth of local debt, local government platforms and state-owned enterprise debt issuance may pick up. In terms of currency, the “squeeze” effect of rising fiscal deposits on the growth of base money and M2 may also be eased with the easing of fiscal margins.

For May Social Finance,CreditThe detailed analysis of M2 and M2 is as follows: 1) The new social financing in May was 1.92 trillion yuan, which was significantly lower than the 3.19 trillion yuan in the same period last year, but higher than the 1.71 trillion yuan in May 2019.In terms of itemized terms, trust loans, entrusted loans andbankThe total balance of “non-standard” assets such as undiscounted acceptance bills decreased by 262.9 billion yuan from the previous month, compared with a month-on-month increase of 22.6 billion yuan in May last year and a month-on-month decrease of 145.1 billion yuan in May 2019.

At the same time, the balance of corporate bonds in May decreased by 133.6 billion yuan from the previous month, while the month-on-month increase of 1033 and 287.9 ​​billion yuan in May 2019 and 2020, respectively. In addition, the net issuance of government bonds in May was RMB 670.1 billion, which was significantly lower than the RMB 1,136.2 billion in the same period last year, but higher than the RMB 385.7 billion in May 2019.

2) New RMB loans in May were 1.5 trillion yuan, higher than Bloomberg’s consensus estimate of 1.4 trillion yuan and 1.48 trillion yuan in the same period last year. The year-on-year growth rate of loan balances in May slowed slightly to 12.2% from 12.3% in April. In May, new medium- and long-term loans to enterprises increased year-on-year, and new residents’ medium- and long-term loans declined slightly year-on-year, reflecting that corporate financing needs are stable and real estate demand may slow marginally, but there is still resilience in the short term.

Specifically, new medium and long-term loans to enterprises in May were 652.8 billion yuan, higher than the 530.5 billion yuan in the same period last year. At the same time, new residents’ medium- and long-term loans amounted to RMB 442.6 billion, slightly lower than the RMB 466.2 billion in May last year. On the other hand, new short-term loans and bill financing of 270 billion yuan in May were significantly lower than the 517.8 billion yuan in the same period last year.

(Article Source:Huatai Securities）

(Editor in charge: DF506)