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New bank deposit rules could squeeze shadow finance

Chinese banking authorities have issued new rules to curb the artificial inflation of deposits at the end of each month or quarter. The new regulations could significantly reduce banks’ exposure to shadow finance, likely squeezing their finances and lending capacity. However, we are unsure how effectively the new regulations will be enforced.

15 September 2014

Recovery proves short-lived

Sluggish July data and initial indications from our proprietary surveys in August appear to have borne out our prediction that the apparent uptick in Chinese economic growth seen in June would prove short-lived.

28 August 2014

Tempering the optimism

Despite indications of a further strengthening of Chinese economic activity in July, it remains too soon to call a sustainable recovery.

31 July 2014

China’s monetary policy shift

Recent targeted moves to boost base money supply suggest that China’s central bank is set on managing liquidity through direct measures aimed at specific sectors of the economy, rather than previously used market-wide injection tools such as rate cuts or RRR hikes

03 July 2014

Lessons from the liquidity squeeze

A year on from the severe liquidity squeeze in June 2013, bankers and market participants have been debating the lessons learned and examining why there wasn’t a repeat performance this year.

03 July 2014

Shadow finance slowdown intensifies

Our latest analysis of official and industry data highlights the slowdown in shadow financing seen since the middle of 2013, a trend that is raising default risks across a number of key sectors of the economy.

19 June 2014

Bank performance shows strong divergence

Our ongoing analysis of Chinese financial institutions continues to highlight the varied and wide-ranging impact that the liquidity squeeze in June 2013 has had on a wide range of institutions and asset classes. Listed Chinese banks’ 1Q14 financials provide further evidence of this trend.

22 May 2014

PBoC cuts rural bank RRR

Economists mull the implications of the central bank’s reduction of the deposit reserve requirement ratio for rural banks.

24 April 2014

Chinese banks feel the squeeze

An analysis of listed banks’ 2013 results highlights the negative impact of the shadow finance squeeze on banks’ interest income, profits and non-performing loan ratios since the middle of last year.

10 April 2014

Banks in a bind over WMPs

Banks are under pressure to sell higher-yielding WMPs to shore up deposits even as their interest spreads narrow, likely squeezing their profits this year.

13 March 2014

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