7 Jun 2013
Flash: China aims to diversify external funding sources - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts see that signs that China is looking for more (and better) sources of external funding sources is mounting.
They begin by noting that this week, the media suggest that plans are moving ahead to cut red tape to boost foreign investment by easing application and approval procedures for foreign investors. Separately, they are hearing more talk about the development of local bond futures markets to give investors better hedging tools. They feel that these developments are in line with the view that there may be growing urgency to attract more stable funding capital to make up for the diminished capacity of local lenders. They write, “In fact, reports suggest that China’s big four banks issued only RMB208 bln loans in May (down from RMB245 bln in April). This will surely lead to a downward revision of expectations for the May new yuan loans data release next week, where consensus is currently at RMB850 bln.”
They begin by noting that this week, the media suggest that plans are moving ahead to cut red tape to boost foreign investment by easing application and approval procedures for foreign investors. Separately, they are hearing more talk about the development of local bond futures markets to give investors better hedging tools. They feel that these developments are in line with the view that there may be growing urgency to attract more stable funding capital to make up for the diminished capacity of local lenders. They write, “In fact, reports suggest that China’s big four banks issued only RMB208 bln loans in May (down from RMB245 bln in April). This will surely lead to a downward revision of expectations for the May new yuan loans data release next week, where consensus is currently at RMB850 bln.”