Thoughts on Loan Growth number..

Had a discussion with a friend over this topic for a while, ever since the rumor started last week from Caijing that new loan amount in March is going to be another 1.8 trillion, adding on top of an existing 1.7 trillion in Jan and 1.1 trillion in Feb.

Sequentially, a good question to ask is, will PBOC move, given the New Loan target for 2009 is set to be only around RMB 5 trillion and we are now not far away from there.

Before anything to be concluded, let us look at some facts.

A. PBOC was out to mop up liquidity by issuing Central Bank Notes (From Shang Hai Security). On the first week of April, PBOC issued about RMB 80 billion of 3 months CBN to absorb the excess liquidity; and this number increased to RMB 95 billion on the 2nd week.

B. 1Q of 2009 sees the biggest CBN maturity, which made the total issuance less than the amount of matured, i.e., open market operation from PBOC looks big but indeed not, so still a net injection of liquidity, while making it on a smaller basis by CBN issuance.

With that being said, I guess the best way to look at what is going to happen is, PBOC might want to be there and say something, to act as if they are not asleep, but it won’t actually move aggressively to neither of the directions given:

1.      To turn off the injection of liquidity is not just a decision can be made by PBOC on its own since it is such a useful tool to stimulate the economy. It will be something of higher level like State Council.

2.      Though macro number out there is improving but it is still mixed and far away to a level of a recovery yet. It will be an embarrassing mistake to make, to soak up the liquidity too early now and to be forced to re-open the gate later on.

So, while a decline of loan growth number in April is reasonable, personally speaking I do not see a huge risk of near term tightening from PBOC or anything alike.

That having been said, we also need to note that, given we had such a run for the past quarter, the market might want to take this opportunity to take profit, regardless what PBOC actually can do and will do. Sell before Mr. Zhou Xiao Chuang…

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Apparently, they r not worring about it, yet...

中

国央行似乎对自己推动贷款发放量增长的措施感到满意。其今年首次货币政策例会的报告说，银行流动性“充裕”。这某种程度上可能还是一种较为保守的说法，因为最新数据显示，3月份的新增贷款额达到了创纪录水平。但由于中国经济增长并未因最近出现的一些改善迹象而摆脱脆弱状态，央行尚不准备改变政策。以下为中国央行周日就其货币政策例会所发声明的全文：

中国人民银行货币政策委员会2009年第一季度例会日前在北京召开。

会议分析了当前国内外经济金融形势。会议认为，国际金融危机继续蔓延和深化，国际金融市场仍处于动荡之中。为应对国际金融危机的严重冲击，促进经济平稳较快发展，我国及时调整宏观经济政策取向，采取了一系列扩大内需、促进经济增长的政策措施。当前，所采取的政策措施取得初步成效，出现了一些积极迹象，银行体系流动性充裕，货币信贷快速增长，金融体系平稳运行。

会议研究了下一阶段货币政策取向和措施。会议认为，要认真贯彻党中央、国务院关于宏观调控的决策部署，落实适度宽松的货币政策，保持政策的连续性和稳定性。进一步理顺货币政策传导机制，保持银行体系流动性充裕，保证货币信贷总量满足经济发展需要。继续优化信贷结构，加大对“三农”、中小企业等薄弱环节的金融支持，切实解决一些企业融资难问题，严格控制对高耗能、高污染和产能过剩行业企业的贷款。继续推进金融改革和创新，加强风险管理，增强金融企业抵御风险能力。

本次会议由中国人民银行行长兼货币政策委员会主席周小川主持，货币政策委员会委员李勇、苏宁、易纲、刘明康、尚福林、吴定富、蒋超良出席了会议，尤权、朱之鑫、马建堂、胡晓炼、樊纲因公务请假。人民银行天津分行、沈阳分行和成都分行负责同志列席了会议。