[增持评级]BANKING SECTOR:MARCH M2 YOY GROWTH MISSED EXPECTATIONS; LIQUIDITY CONDITIONS IN 2018 EXPECTE.

时间:2018年04月16日 19:10:48 中财网
March M2 YoY growth missed expectations. The 8.2% YoY growth of M2 missed expectations in March 2018and decreased MoM. M1 YoY growth continued to decrease MoM. According to the PBOC, the MoM decrease inM2 YoY growth was primarily due to some temporary factors including seasonal reasons and so on. We think thatthe MoM decrease in M2 YoY growth doesn't show that the economy turned weak. We expect YoY growth of M2to mildly recover to 10.0% in 2018.
New RMB loans was basically in line in March. The 37.2% YoY decrease in new TSF in March 2018 wasdriven by the decrease in new RMB loans to real economy, new foreign currency loans, new entrusted loans, newtrust loans, new undiscounted bills, and new equity financing. New RMB loans was basically in line in March. NewRMB loans increased by 9.8% YoY and 33.4% MoM. Medium-term and long-term RMB loans decreased by16.0% YoY and 14.5% MoM, respectively. Of which, personal medium-term and long-term RMB loans decreasedby 16.3% YoY and increased by 17.1% MoM, respectively; non-financial corporate medium-term and long-termRMB loans decreased by 15.8% YoY and 29.9% MoM, respectively. The YoY decrease in personal medium-termand long-term RMB loans shows that residents have been deleveraging. The proportion of new RMB loans to realeconomy in new TSF was 86.1% in March 2018.
Our views on liquidity: In March 2018, the PBOC extended RMB 54.1 bn in loans via standing lending facility,RMB 432.5 bn in loans via medium-term lending facility and RMB 80.8 bn in loans via pledged supplementarylending. The CPI for March 2018 was 2.1%. In the “China Monetary Policy Report, The Fourth Quarter 2017”, thePBOC expressed focusing on the three tasks of serving real economy, preventing and controlling financial risks,and deepening financial reforms, continuing to adopt prudent and neutral monetary policies to create a neutraland moderate monetary and financial environment for supply-side reform and high-quality development. Underthe background that the economy is projected to grow steadily, in order to control economic exposure, keep theRMB foreign exchange rate stable, and control capital outflow given the U.S. Fed’s interest rate hike andshrinkage of balance sheet, we expect that the PBOC will maintain prudent and neutral monetary policies andChina's liquidity conditions will remain slightly tight in 2018.
Sector views: We expect that earnings recovery and asset quality improvement of mainland Chinese banks willboost their valuations. We maintain “Outperform” rating for the banking sector. Our top pick is BOCHK (02388HK); our rating is "Buy" and TP for the Company is HKD47.52.
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