July Loans and TSF Falls Sharply

The increase in TSF fell sharply in July, pulled lower by a big plunge (￥416 billion) in undiscounted bankers' acceptances. That decline exceeded the amount of new loans in July, which came to ￥385 billion. Here is FT Alphaville from 2012 when a similar drop occurred: Has a segment of China’s shadow banking system been curtailed? In the PBOC's statement explaining the data (see: 人民银行有关部门负责人解读7月份主要金融数据) they said the following (Google translated):

Just look in July, in addition to a small increase of RMB loans, the main trust loans, bankers 'acceptances and other projects related to off-balance sheet financing undiscounted significantly reduced, especially undiscounted volatile bankers' acceptances, fell 416 billion yuan in July . This is mainly related to business development and the recent norms, related financial institutions to strengthen risk control. Historically, regulators issued a policy to strengthen financial supervision, after such norms bills, bank letter of cooperation and commercial bank financing and other related businesses in the short term there will be some shrinkage, but the long term regional financial help guard against systemic risk, enhance economic sustainability of financial services entity.

As happened in 2012.

Update: Here's FT Alphaville quoting UBS making a similar "one-off" argument: China’s credit dive: probably a freak occurence

The Alphaville blogger closes with:

...this could result in more projects starting and more targeted money pushed out.

I'm not sure how much money is left to push out. Credit can be expanded, but many local governments already accelerated their budgeted projects into the first half.

Here's TSF by month, followed by TSF year-on-year growth.

As for money supply, M2 increased 13.5% yoy after falling 1.3% mom. M1 fell 3% mom. Here are both yoy trends, along with the value of the Shanghai Composite.

Finally, here's a reason to believe this month's plunge in lending and M2, will be matched by a spike in August. This chart shows the month-on-month changes in M2 in the U.S. and China. The U.S. is fairly steady in its policy, with money supply growth set on cruise control. The Chinese slam the gas then brake, then slam the gas, then brake. In July, they hit the brakes.