<div id="readability-page-1"><div><p>JPM released a research report stating that Chinas credit data for April were significantly weaker than expected, with Aggregate Financing to the Real Economy (Flow) and new RMB loans both far below market consensus and the banks forecasts. Among them, the single-month contraction in both household loans and corporate loans was the largest on record. The bank believes Aprils weak credit performance was partly affected by seasonal factors, but the magnitude exceeded expectations. It recommends a more defensive portfolio positioning and favors the Big Four state-owned banks with stronger loan pipelines.</p><p>The report noted that Aggregate Financing to the Real Economy (Flow) in April amounted to RMB620 billion, about half of the market expectation of RMB1.25 trillion and JPMs forecast of RMB1.24 trillion. New RMB loans decreased by RMB10 billion, far below the market expectation of RMB300 billion and the banks forecast of RMB271 billion. Household loans contracted by RMB787 billion MoM, while corporate loans contracted by RMB870 billion MoM, both marking the largest single-month declines on record. Bill financing increased sharply by RMB1.24 trillion to fill the gap, which the bank believes sends a negative signal for blended loan yields and NIM.</p><p>The bank pointed out that retail loan demand further deteriorated, with the YoY decline widening to 0.7%. Both short-term and medium- to long-term loans recorded MoM contractions, indicating continued weakness in mortgage and consumer credit demand. Although property transaction volumes in first- and second-tier cities showed slight improvement, the weak performance of mortgage loans remained surprising. The gap between M1 and M2 growth slightly widened to negative 3.6%, reflecting weaker transactional money demand relative to precautionary savings, further reinforcing signals of subdued credit demand. (ad/u)</p></div></div>

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<p>JPM's report highlights that China's April credit data fell significantly short of expectations, with Aggregate Financing at RMB620 billion and new RMB loans decreasing by RMB10 billion. The largest recorded monthly declines in household and corporate loans were noted. The bank recommends a defensive strategy favoring the Big Four state-owned banks due to their stronger loan pipelines, while indicating deteriorating retail loan demand and a widening gap between M1 and M2 growth.</p>

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JPM: China Apr Credit Data Far Below Expectations, Favor Big Four State-owned Banks for Defensive Positioning