China's October new yuan loans contract for third time this year

what happened

China's new yuan bank loans fell in October for the third time this year, according to Reuters calculations based on People's Bank of China data. The contraction was 100 billion yuan (about $14.99 billion), while analysts polled by Reuters had expected a gain of 20 billion yuan. A year earlier, the figure was a gain of 220 billion yuan.

Household loans, including mortgages, dropped by 430 billion yuan, and corporate loans fell by 160 billion yuan after a 1.29 trillion yuan increase in September. New yuan loans totalled 11.42 trillion yuan for the first ten months, down from 14.97 trillion yuan a year earlier.

Outstanding yuan loans grew 4.7% year on year, a record low pace and below the 4.8% forecast. Broad M2 money supply rose 7.1%, its slowest pace in 19 months.

why it matters

Weak credit demand is holding back domestic growth and weighing on sentiment toward Chinese assets. Analysts say the central bank's priority remains exchange-rate stability, so fresh policy measures look unlikely in the near term. Targeted credit support introduced in late September has yet to lift business investment and household spending.

market impact

China stocks: weak credit keeps domestic demand and investor sentiment under pressure

• ▼China stocks pressure down — weak credit and slower money supply growth limit economic expansion

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