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ANZ analysts note that China’s latest monthly credit data show signs of a contraction after the lending boom over the first half of 2019.

Key Quotes

“On top of the slowdown in the wider economy, tighter regulations on the funding of property projects as well as higher interbank borrowing rates faced by vulnerable smaller banks have all weighed upon credit growth and loan demand in July.”

“Moreover, the available quota of special local government bonds (LGBs) will be depleted before September. All these factors point to a continued downtrend in credit growth, which will add pressure on the People’s Bank of China’s (PBoC) to ease, in our view.”