Banks weigh on index gauges as China credit growth hits new high

ATF indexes barely moved on Wednesday

Banks weigh on index gauges as China credit growth hits new high
The ATF China Bond 50 Index was little changed.

(ATF) Bank names weighed on the ATF indexes on Wednesday, as new economic data indicated better-than-expected broad credit growth in September, underscoring China’s continued recovery from the COVID-19 pandemic.

The index gauges barely moved, with the flagship China Bond 50, as well as the ATF ALLINDEX Enterprise and Corporate gauges inching up just 0.01%, 0.01% and 0.02%, respectively. The ATF ALLINDEX Financial and Local Government didn’t move at all.

“Broad credit growth hit its highest level in nearly three years as growth in direct financing and shadow credit picked up amid stable bank loan growth,” Julian Evans-Pritchard of Capital Economics wrote in a research note. Banks beat market forecasts and extended 1.9 billion yuan ($280 million) in net new local currency loans, from 1.28bn yuan in August. Meanwhile, aggregate financing held strong at 3.48bn yuan, only slightly below August’s 3.58bn yuan.

Losses were seen in the bond prices of Bank of China (-0.03% for a yield increase of 0.01%) , China Zheshang Bank (-0.1% for a yield increase of 0.03%) and Agricultural Development Bank of China (-0.35% for a yield increase of 1.67%). The bonds were last traded on 24 September, 28 September and 13 October, respectively.

Bank of China and China Zheshang Bank also weighed on the ATF ALLINDEX Financial, along with Huishang Bank and GF Securities whose bond prices fell 0.03% (for a yield increase of 0.04%) and 0.48% (for a yield of increase 8.96%). These bonds traded last on 29 September and 21 August, respectively.

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China Bonds ATF China Bond 50 Index economy China