Lan Shen, Economist at Standard Chartered, notes that in China sentiment among SMEs has weakened in October, along with a decline in their current performance as the headline SMEI (Bloomberg: SCCNSMEI
Key Quotes
“The ‘current performance’ sub-index fell the most, followed by the ‘credit’ and ‘expectations’ sub-indices, reflecting mounting downward pressure on SMEs’ real activity.”
“Sales turned sluggish on slowing domestic demand and increasing export uncertainty, according to our survey results.”
“Credit conditions for SMEs deteriorated in October after a temporary improvement in August. Despite flush market liquidity, banks’ appetite for lending to SMEs remained low and borrowing costs for SMEs stayed elevated.”
“We expect the October reserve ratio requirement (RRR) cut to provide more longer-term funding at lower cost, which could help to easing financing pressure in the real economy.”
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