China reported new bank loans dropped to the lowest level in two years as manufacturers held back due to trade uncertainties and signs of weak demand. Net new loans extended in October totaled 661bn yuan, down sequentially from the 1.69tn yuan seen in September, according to PBOC data.
Meanwhile, national aggregate financing fell from 2.27tn yuan in September to 618bn yuan in October. Markets were expecting a reading of 950bn yuan.
Given the trend of new bank loans followed weaker producer prices which fell 1.6 percent in October, the largest drop since mid-2016, observers don’t expect the situation to improve any time soon given the slowing industrial demand and almost deflationary producer prices.
Economic headwinds from the U.S./China trade war is now compounded by structural domestic challenges caused by the fact the state owns both enterprises and banks.
At the consumer level, total car sales declined 4 percent YoY and there were double-digit declines in sales of new energy vehicles - by as much as 45.6 percent in October, after losing 33 percent in September. The trend down in overall sales has been running for 16 consecutive months, suggesting persistent weakness of the world’s biggest market.
The pound rose the most in three weeks after Nigel Farage announced he would not challenge the Tories at the upcoming election, which is a boost to PM Boris Johnson. Mr Farage claimed he is assured of the PM’s plans for a clean split with the EU and said the election’s focus would be on the Labour seats.