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At 10 a.m. today (October 14), the People’s Bank of China released financial data for the first three quarters on its official website.
Data show: China broad money M2's year-on-year growth rate rebounded for the first time in 10 months. As of the end of September, the balance of broad money (M2) was 165.57 trillion yuan, a year-on-year increase of 9.2%, and the growth rate was 0.3 percentage points higher than the end of last month.
In addition, multiple financial data also exceeded expectations:
The scale of social financing was 1.82 trillion yuan, compared with the expected 1.5727 billion yuan, and the previous value was 1.480 billion yuan.
New RMB loans were 1.27 trillion yuan, compared with the expected 1.2 trillion yuan, and the previous value was 1.09 trillion yuan.
M2 Money supply is 9.2% year-on-year, expected to be 8.9%, and the previous value was 8.9%.
M1 Money supply is 14% year-on-year, expected to be 13.5%, and the previous value was 14%.
M0 Money supply is 7.2% year-on-year, expected to be 6.6%, and the previous value was 6.5%.
This means that although the overall tone of monetary policy is stable, the central bank has slightly relaxed the money supply.
The above figure shows the "year-on-year growth rate" data of broad money M2 over the past year. It can be seen that since reaching 11.6% in October last year, it has declined month by month or occasionally remained flat, and finally reached a low of 8.9% in August this year.
html The "money printing speed" of 28.9% is the lowest point since the reform and opening up (December 1978). In the 1980s, China's broad money M2 frequently grew by more than 30% year-on-year. In the "four trillion" era in 2009, the year-on-year growth rate was 27.7%.
The year-on-year growth rate of broad money M2 can be understood as the speed of currency growth, or the "speed of money printing." The part that exceeds the year-on-year growth rate of GDP in the same period can be understood as the "real inflation rate." For investors, outperforming M2 is an important goal. For example, in the Hurun Rich List just announced, the rich have generally outperformed M2 by a large margin in the past year.
If the investment income is lower than "M2 year-on-year growth rate - GDP year-on-year growth rate", it means that your wealth is shrinking.
However, in recent years, with various efforts in financial innovation and evasion of supervision, M2 statistics have gradually lagged behind the times, and have not included all " quasi-currency ". There are more and more ways of currency derivatives, such as monetary funds, interbank certificates of deposit, P2P, etc. In addition, the central bank once controlled the currency growth rate, so the growth rate of M2 continued to decline.
However, it should be noted that this decline has "false elements", and our real currency growth rate is still on the high side. For example, the expansion rate of total assets of the banking industry is still more than 10%, and the growth rate of social financing scale as of the end of September was 13%.
Therefore, 9.2% is definitely not the current rate of expansion of the total monetary volume. This rate is at least between 10% and 13%.
If the real growth rate of money is 11% and the GDP growth rate is 6.9%, it means that even if you can get 4% income through bank financing or monetary funds every year, your real investment rate of return is - a loss of 0.1%! [4%-(11%-6.9%)]
htmlThe rebound in M2 year-on-year growth in September is good news for the stock and property markets. It will drive out funds stagnated in monetary funds and bank financial management, thereby increasing investors' risk appetite.
Although the statistical caliber of M2 is narrow, it can tell us that the monetary tightening has bottomed out. Don’t forget, the central bank also announced a targeted RRR cut on September 30. Although this RRR cut was only implemented in early 2018, it was very powerful. In fact, it was “a comprehensive RRR cut (0.5%) + a double-strength targeted RRR cut (1%).”
The reason why monetary tightening has bottomed out is because economic growth has reached an inflection point. As winter enters the property market, transaction volume drops sharply, resulting in a sharp drop in taxes and fees, which in turn affects many industries such as steel, cement, building materials, and home appliances; the RMB appreciates too much, and exports will be significantly affected. All of this will have an increasingly significant impact in the coming months.
In order to offset this impact, it is inevitable to relax currency to a certain extent.Yesterday, the central bank over-extended the "medium-term lending facility (MLF)" that expired in September. In addition, private investment has also shown signs of significant decline. In the future, it is expected that more "opening up" and "burden reduction and tax reduction" policies will be introduced to stimulate a rebound in private investment.
Therefore, whether it is the stock market or the property market, we cannot be too optimistic, because monetary policy has once again undergone a "subtle shift"!
