PBoC Not Curbing Lending, Market Looks to Politburo

A day earlier this news leaked: PBoC Asks Banks To Pare Back Lending: Caixin

Well-respected Chinese financial magazine Caixin reported this afternoon that the PBoC is now asking its banks to pare back lending this month. The central bank is asking banks to lower the amount of new loans to just 70% of what was planned at the beginning of the month.

This order is "non-existent" according to reports out today. Additionally, the market is expect a change in monetary policy at the end of the month. As reported earlier,

iFeng: 央行压缩4月信贷子虚乌有 货币政策走向月底定调

Shenwan Hong outlook analysts believe that short-term funds face tense due to the seasonal factors, business tax, MPA assessment and disturbance MLF maturity, and in view of the risk event, with China Railway Materials represented by a series of events of default and local state-owned central enterprises and constantly exposed to spillover effects and June the Federal Reserve may raise interest rates again, both domestic liquidity will face greater pressure. Internal structural problems in financial markets has not yet been resolved, but the external market conditions contrast relative shortage of money during a friendly in 2013, we believe the possibility of similar 620 money shortage is unlikely, but it is difficult to avoid the impact of short-term liquidity.

CITIC Securities, chief fixed-income analyst at research clearly indicates that the future liquidity will continue to serve or reverse repurchase MLF + mode to expand, short-term drop quasi possibility of further decline. Current monetary policy tools focus more on short-term and structured, and the resulting market liquidity is more cyclical bias and fragmented.

Guo Lei, chief macroeconomic analyst at Founder, said Yi-prudential policy in the short term is difficult to loose monetary policy is only possible to present more than 20% of the M1 preliminary vigilant, at least try to maintain a neutral state, but will not significantly reverse drain, close attention Politburo meeting in late April set the tone.

The PBoC injected more than 1 trillion yuan over 5 days this month to deal with tight credit conditions and there are no lending curbs. Money supply growth is accelerating, but new credit is flowing into commodities, homes and debt extensions for zombies. The PBoC is in crisis management mode. I don't see an economic recovery or even stability, only the appearance of stability amid a massive bear market rally.