Credit Growth Weak in August; China Tech Goes Ag; Bank Gold Up 400 tons

New loans of 700b yuan in China fall short of estimates

New loans in China may have hit 700 billion yuan (HK$880 billion) in August, falling below expectations as mounting bad loans put pressure on lending, the China Securities Journal reported.

The figure far exceeded the 385 billion yuan in new loans reported in July but fell short of analysts’ expectations of 750 billion yuan.

Why Jack Ma becoming a dairy farmer is a big deal

This new collision of technology and agriculture is one of the most important phenomena in China today. It is also one of the weirdest. We’re pretty sure Bill Gates never owned a pig farm.

What is really happening is that cutting-edge Chinese brainpower is finally being applied to food quality and safety. High tech innovation and new business models are being brought to a very low-tech sector of the economy. And this collision is already yielding important insights. Here are a few worth noting:

Chinese lenders boost precious metals stock amid rising demand

China is seeking to rein in credit by raising borrowing costs and cutting off lending to sectors considered at risk of default amid a property slump and rising number of bad loans. That is prompting banks to hold more precious metals as they expand their gold-leasing business because it is not subject to loan caps and is considered off-balance sheet lending, according to Industrial Bank.

......The value of precious metals held by ICBC, the country's biggest bank by market value, more than doubled to 91 billion yuan over the period, according to its financial report. That is the equivalent of about 347 tonnes of gold, based on June 30 prices, up from about 158 tonnes a year earlier.

ICBC had rapid growth in its precious metals leasing business and a gold accumulation programme whereby individuals put aside a fixed sum of money each month to buy bullion, the company said in its earnings release on August 28.

China Construction Bank, the country's second-largest lender, held 51 billion yuan of precious metals as of June 30, the equivalent of about 194 tonnes of gold.

Agricultural Bank of China, the third-largest lender, held 21 billion yuan of precious metals as of June 30, the equivalent of about 81 tonnes of gold.

That compares with 17 billion yuan, or 70 tonnes of gold, a year earlier, according to its second-quarter financial report. Bank of China's precious-metals holdings were 215 billion yuan at the end of June, or the equivalent of about 823 tonnes of gold, compared with 570 tonnes a year ago, financial data show.

Credit will only tighten going forward, assuming no policy backtrack, which will keep demand for gold strong.