Macroeconomic Review: Monetary And Credit Data Review In June

Incident: the people's Bank of China has just released the financial statistics report in the first half of 2011, M2 grew by 15.9% over the same period last year, the new RMB loan increased by 633 billion 900 million yuan in June, and the balance of loans increased by 16.8% over the same period (chart 1).

Comment: monetary growth has picked up, but New loan Still tight. In June, M2 grew by 15.9% over the same period last year, up 0.8 percentage points from 15.1% in May, higher than our expected 15.2%, while M2 growth in June has recovered, but it is still below the 16% annual growth target of the central bank. Among them, M0 rose by 14.4% and RMB deposits increased by 17.6%, indicating that the increase in M2 was mainly due to the increase in deposits. The new loan in June was 6339, which was higher than our expected 590 billion yuan, but significantly lower than the 7 trillion and 500 billion yuan in the whole year, and the new loan in June was 886 billion yuan (2). This shows that new loans are still at a low level, and the bank's support for non banking sector is still tight. At the same time, interest rates in the inter-bank market remain high in recent years, indicating that the overall liquidity is still tight (chart 3).

The acceleration of M2 growth in June is mainly reflected in Deposit increase There are three main reasons for our analysis:

The quarterly assessment of the banks prompted banks to transfer the off balance sheet business back to the table. Due to the needs of the end of the season, many banks' financial products design expired in June, resulting in the transfer of some off balance sheet business to the table, resulting in a faster increase in deposits.

Financial deposits declined. June Fiscal deposit It dropped by 134 billion 300 million yuan, compared with 10 billion 100 million yuan in the same period last year (Chart 4). Financial deposits are not included in M2, so the decrease in fiscal deposits is equivalent to an increase in M2, resulting in an increase in private sector deposits.

Foreign exchange grew faster. Foreign exchange accounted for an increase of 277 billion 300 million yuan in June, an increase of 160 billion yuan compared with the same period last year (Chart 5). This also constitutes an important source of M2 increase in June.

Capital inflow is the main reason for the rapid growth of foreign exchange. In the first half of this year, foreign exchange increased by 20885 billion yuan, an increase of 805 billion 700 million yuan compared with 12828 yuan in the same period last year. Considering that the trade surplus of goods in the first half of this year decreased by 10 billion 300 million US dollars compared with the same period last year, the increase in foreign exchange holdings in the first half of this year mainly came from capital inflows and non merchandise trade items under current account. The capital inflow pressure was greater in the first half of this year, which was also reflected in the balance of payments data released yesterday by the State Administration of foreign exchange (chart 6).

Monetary policy is expected to remain tight in the coming months. We believe that monetary policy will continue to maintain a tight balance in June, when CPI inflation is higher than the previous year. In the future, the central bank will continue to control new loans and control the growth of money at a low level. We maintain a forecast of M2 growth of 15% throughout the year. Due to the pressure of capital inflow, the RMB still faces some pressure of appreciation. We maintain the forecast of RMB's annual appreciation of 5-7%.