China Bank Lending Slides In December Despite Loosening

The creation of the “price adjustment risk fund” for initiatives such as energy savings and emission reduction may mean that China’s refiners won’t reap much of a windfall, Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., wrote in a research report Wednesday. The latest data indicates that the Chinese economy is on the path to recovery, as growth in credit depicts improvement in domestic demand.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 3.2 percent, to 3,118.73, while the Shanghai Composite Index lost 3.5 percent, to 2,900.97 points, its lowest level since December 2014.

Louis Tse Ming-kwong, Director of VC Brokerage, said that Friday’s fall can also be attributed to skittish investor sentiment from the expiration of futures contracts and a lack of support from the central government in contrast to Thursday. Freeport nosedived 9 percent and Marathon plunged 7 percent.

That left the country with a trade surplus of $60.09 billion for the month, the General Administration of Customs said on Wednesday.

“Another large trade surplus provides a cushion for the People’s Bank of China in the face of soaring capital outflows”, Capital Economics’ Martin said.

Experts say stocks are coming under pressure from slumping oil prices and uncertainty over China’s slowing economy and its weakening currency. In previous years we’ve seen exports improve in December.

Some economists also raised concerns that the better-than-expected export data could be partly due to currency speculators using false or exaggerated trade invoices to get capital out of China and evade further declines in the yuan.

“The Hong Kong dollar is testing the peak level…which means that money is going out from Hong Kong”, Tse said, adding that he expects the declines to continue and the turnover to become smaller leading up to the Lunar New Year in early February.

That index has dropped 18.03 percent since the start of 2016.

The IMF spokesman said that while China’s rebalancing of its economy has been bumpy, the IMF’s view of the country’s economic fundamentals were unchanged.

That squeeze has narrowed the gap with the onshore market, though on Friday the offshore yuan was trading a little weaker, and 0.4 percent below the onshore spot at 6.6140 per dollar.

For years, China’s booming economy was a key engine for global growth, but now its slowdown is rippling out through global commodity markets.

While its crude oil imports in 2015 hit a record 6.71 mln barrels per day, its fuel exports also hit an all-time high of 693,300 bpd as refiners had to look overseas to clinch sales.

JPMorgan Chase rose 2 percent after the bank reported earnings that beat forecasts.