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in august, the credit and social financing indicators continued to run at a low level, but compared with market expectations, they were not bad. overall, the financial data in august were mixed.

on the one hand, m1 has been negative for five consecutive months year-on-year, continuing to hit a record low; residents' short-term loans have increased less year-on-year for seven consecutive months, residents' medium- and long-term loans have again turned to less year-on-year growth, and corporate medium- and long-term loans have increased less year-on-year for six consecutive months.

on the other hand, the accelerated issuance of government bonds continued to provide strong support for the growth rate of social financing. the growth rates of social financing and m2 have entered a stable period. the growth rates of social financing in july and august were 8.2% and 8.1% respectively, which were basically the same as 8.1% at the end of june; the growth rates of m2 in july and august were both 6.3%, slightly higher than 6.2% at the end of june.

against this background, the heads of relevant departments of the central bank rarely interpreted the august financial data, which attracted widespread attention from the market.

in response to the considerations and measures for the next monetary policy, the head of the relevant department of the central bank said, "the monetary policy will be more flexible, moderate, precise and effective, increase the intensity of regulation, speed up the implementation of the financial policy measures that have been issued, and start to introduce some incremental policy measures to further reduce the financing costs of enterprises and residents' credit costs, and maintain a reasonable and ample liquidity."

what signals does the central bank send out by interpreting monthly data? how to understand "increasing regulatory efforts and launching some incremental policy measures"?

financial data continued to be low in august

under the combined effects of the "water squeezing" effect and the pain of the transformation from old to new growth drivers, credit, social financing and money supply have generally slowed down compared with the previous period.

in august, rmb loans and social financing increased by 900 billion yuan and 3.03 trillion yuan respectively, a year-on-year decrease of 460 billion yuan and 98.1 billion yuan respectively.

specifically, in august, loans to enterprises and public institutions increased by 840 billion yuan, a decrease of 108.8 billion yuan year-on-year. among them, the increments of short-term loans, medium- and long-term loans, and bill financing were -190 billion yuan, 490 billion yuan, and 545.1 billion yuan, respectively, with year-on-year changes of -149.9 billion yuan, -154.4 billion yuan, and 197.9 billion yuan, respectively.

on the resident side, household loans increased by 190 billion yuan in august, a decrease of 202.2 billion yuan year-on-year. among them, short-term loans and medium- and long-term loans increased by 71.6 billion yuan and 120 billion yuan respectively, a decrease of 160.4 billion yuan and 40.2 billion yuan year-on-year respectively.

hongta securitiesli qilin, director and chief economist of the institute, believes that, on the one hand, we are currently in a period of transformation from old to new drivers and deepening structural adjustment. although emerging industries such as high-tech manufacturing have made some progress in credit expansion, they cannot completely offset the credit tightening faced by the real estate industry in the process of "de-real estateization" and the limited credit expansion faced by urban investment platforms in the context of debt resolution. in addition, factors such as "squeezing out water" from financial statistics and balanced credit supply have also contributed to the slowdown in credit growth this year. on the other hand, due to the expected improvement in employment and future income, coupled with the impact of the declining wealth effect, residents are cautious in consumption, and the supply of retail credit by banks has also been reduced in price and volume.

however, although credit supply continued to grow less year-on-year in august, it improved seasonally and month-on-month, and the credit structure continued to optimize.

in august, rmb loans increased by 900 billion yuan, a month-on-month increase of 640 billion yuan. among them, short-term loans and medium- and long-term loans of enterprises (institutions) in august increased by 360 billion yuan and 360 billion yuan respectively from the previous month; short-term loans and medium- and long-term loans of residents in august increased by 287.2 billion yuan and 110 billion yuan respectively from the previous month.

in terms of social financing, new social financing in august was 3.03 trillion yuan, a slight decrease of 98.1 billion yuan year-on-year and a significant increase of 2.26 trillion yuan month-on-month, with a growth rate of 8.1%.

the head of the relevant department of the central bank also said that the recent growth rate of m2 balance is relatively stable. in august, the growth rate of the balance of social financing scale and rmb loans was above 8%, which was about 4 percentage points higher than the nominal gdp growth rate in the first half of the year. against the background of accelerated structural transformation, financial data still maintained steady growth on a high base, and the support for the real economy was stable.

everbright securitieschief fixed income analyst zhang xu predicts that as the previous supportive macro policies take effect and the newly planned policies take root, the growth rate of social financing and m2 will gradually enter a stage of stable rebound in the next stage.

gf securitiessenior macro analyst zhong linnan said that the total social financing in august slightly exceeded expectations, which may correspond to the marginal stabilization of financial conditions against the backdrop of an increase in demand for stable growth since the second quarter; however, judging from indicators such as the social financing structure and m1, the current weak financing situation still needs to be substantially changed.

what incremental policies can be expected?

the economic recovery is slower than expected, and insufficient demand remains the core constraint. to maintain the annual growth rate of 5%, we urgently need continued and more powerful policies.

the head of the relevant department of the central bank said that they will increase the intensity of regulation, speed up the implementation of the financial policy measures that have been issued, and start to introduce some incremental policy measures to further reduce the financing costs of enterprises and the credit costs of residents.

this is not the first time that the central bank has expressed its position on the incremental policy. at the end of august, pan gongsheng, governor of the central bank, said that the central bank would study the incremental policy measures for reserves and enhance the coordination and cooperation of macroeconomic policies.

this also makes the market full of expectations for new policy measures. as for how to understand "increasing regulatory efforts" and "introducing some incremental policy measures", market analysts generally believe that the central bank may support the expansion of domestic demand and promote a moderate recovery in prices by lowering the reserve requirement ratio and interest rates.

huatai securitiesthe fixed income research report believes that the central bank's rare interpretation of the monthly data this time can, on the one hand, avoid the market's over-interpretation of the data and convey the monetary policy's attitude of stabilizing growth and expectations. on the other hand, it also indicates that the reserve requirement ratio cut is likely to be implemented, and the interest rate cut may depend on the economic data from august to september and the fed's operational decision.

zhang xu suggested that the reserve requirement ratio can be lowered at the right time according to the needs of economic operation, financial market and macro-control orientation. in addition, in the operation in late september, the mlf (medium-term lending facility) interest rate can be guided to further decline, which will play a role in reducing the funding cost of the banking system. at present, the mlf policy interest rate is in the early stage of changing from strong to weak. at this time, the decline of the mlf interest rate will also help market players fully feel the strengthening of monetary policy regulation.

in addition to policies such as lowering the reserve requirement ratio and interest rates, market expectations for lowering existing mortgage rates are rising. wang qing, chief macro analyst at orient securities, believes that if the second round of lowering existing mortgage rates is launched, it will be the key to reversing expectations for the property market.

however, dong ximiao, chief researcher of ccb, has a different view on the effect of the concentrated reduction of existing mortgage interest rates. he believes that the significance of the concentrated reduction of existing mortgage interest rates may not be great. the concentrated reduction of existing mortgage interest rates is a special policy adopted in a special period and should not become a normalized and daily policy measure, otherwise it will have a great impact on the operation and management of commercial banks.

huatai securities believes that the probability of a reduction in existing mortgage loans will increase, especially as household consumption needs to be boosted and prepayment of loans remains high. however, the magnitude of the reduction must still take into account the level of banks' net interest margins. from a controllable perspective, the implementation of mortgage transfers remains difficult.

"countercyclical policies remain the key in the future. potential policy space includes lowering the reserve requirement ratio, lowering interest rates, adjusting the interest rates on existing mortgage loans, expanding policy support for stockpiling, and continued adjustment of real estate financial policies in first-tier cities," said zhong linnan.

citic securitiesthe research report pointed out that if the adjustment of lowering the interest rate of existing mortgage loans is implemented, while reducing the repayment pressure of borrowers and curbing the trend of early loan repayment, it will also increase the pressure on banks' interest rate spreads, so it is necessary to lower deposit rates to cooperate.