China's TSF rebound in September offset by domestic FX loans' fastest decline since 2002

Total social financing amounted to RMB1.3tn.

According to Barclays Research, TSF in September amounted to RMB1.3tn, higher than RMB1.2trn Bloomberg consensus and RMB1.08tn in August.

Barclays notes that the continued rebound was primarily driven by: 1) new loans to the real economy rebounding to RMB 1.04trn (from RMB776bn in August); 2) RMB 373bn in bonds, which is the second highest level of growth in history, likely as a result of a lower interest-rate environment and volatile stock market; and 3) a rebound of entrusted loans to RMB 244bn in September (vs. less than RMB 130bn since Jan-15).

"However, strong growth in the above three categories was partially offset by domestic FX loans, which declined at their fastest pace since 2002 (-RMB 235bn). We expect FX loans to remain weak until expectations on the RMB exchange rate stabilise, continuing to put pressure on banks with large FX business such as BOC."

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