C50 Leading Indicator Survey: Social financing growth rate expected to rebound significantly in April, while CPI YoY growth rate may decline

The latest results of Cailian Press's "C50 Wind Vane Index" indicate that the market expects a significant rebound in the growth rate of total social financing (TSF) in April, with new loans potentially increasing less YoY. Among them, the median forecast of market institutions for new RMB loans in April is 0.34 trillion yuan, while the median forecast for new TSF in April is 1.33 trillion yuan, up 1.5 trillion yuan YoY. Given the low base YoY, over 60% of institutions expect the TSF growth rate to exceed 8.8% at the end of April.

In terms of prices, the market expects the CPI growth rate in April to decline, with the PPI decline potentially continuing to widen. From a YoY perspective, the median forecast of market institutions for the CPI YoY growth rate in April is -0.2%, and for the PPI YoY growth rate in April is -2.8%.

The "C50 Wind Vane Index Survey" is initiated by Cailian Press and completed by various research institutions in the market. The results comprehensively reflect the expectations of market institutions regarding macroeconomic trends, monetary policy perceptions, and financial data. Nearly 20 institutions participated in this survey.

The median forecast for new RMB loans in April is 0.34 trillion yuan, potentially increasing less YoY.

In March, new RMB loans amounted to 3.64 trillion yuan, up 550 billion yuan YoY.

In this survey, the median forecast of market institutions for new RMB loans in April is 0.34 trillion yuan, down 390 billion yuan from 0.73 trillion yuan YoY, with institutions' forecast range being from 0.13 trillion yuan to 1.2 trillion yuan.

Data shows that the return on assets (ROA) of industrial enterprises in March was 4.1%, pulling back 0.1 percentage point from February. Multiple market institutions expect that credit growth in April will still be constrained by corporate credit demand YoY.

Bian Quanshui, Chief Macro Analyst at Western Securities, told a Cailian Press reporter, "Since the end of last year, loan growth has slowed down to some extent due to local governments issuing special refinancing bonds to repay loans. If the impact of special bond replacement is excluded, the YoY growth rate of the outstanding RMB loan balance exceeds 8% on a comparable basis. Looking ahead, local government bond replacement may continue to suppress loans."

Liao Bo, Co-Chief Macro Analyst at Zheshang Securities, also stated that due to local government debt resolution, some outstanding loans in the hidden debt of certain urban investment platforms have been replaced or prepaid, while new loans are the difference between newly issued loans and loans repaid in the current period. Therefore, the scale of new loans in the month will be somewhat affected.

In April, a total of 243.4 billion yuan in special refinancing bonds for debt replacement were issued by various provinces. Technical disruptions to credit still exist. It is expected that the YoY increase in corporate loans will mainly come from an increase in bill financing, with effective loan demand remaining weak and endogenous financing willingness of real enterprises not strong.

From the household sector perspective, the pullback in the transaction area of commercial housing in April also dragged down medium and long-term household loans.

High-frequency data shows that the transaction area of commercial housing in 30 major cities declined by 13.3% YoY. Lu Zhengwei, Chief Economist at Industrial Bank, stated, "The negative YoY change in the transaction area of commercial housing in 30 cities is the main drag on the overall real estate transaction area, indicating weak household credit performance."

In the view of Zhang Wenlang, Chief Macro Analyst at the Research Department of China International Capital Corporation (CICC), due to the relatively concentrated credit extension in Q1, some financing demands may have been brought forward. Considering that April is traditionally a low credit month, he expects new credit in April to increase less YoY.

The growth rate of total social financing (TSF) in April is expected to rebound significantly, with the median forecast for new TSF at 1.33 trillion yuan.

In March, new TSF reached 5.9 trillion yuan, an increase of 1.1 trillion yuan YoY, with government bonds and RMB loans being the main contributors.

The current survey indicates that the median forecast for new TSF in April among market institutions is 1.33 trillion yuan, an increase of 1.5 trillion yuan compared to the -198.7 billion yuan in April 2024, with forecasts ranging from 0.9 trillion to 1.6 trillion yuan. Given the low YoY base, over 60% of institutions expect the TSF growth rate to exceed 8.8% by the end of April.

Regarding the significant YoY increase in TSF in April, Liao Bo analyzed that the increase mainly came from government bonds, unaccepted bankers' acceptances, and corporate bonds.

High-frequency data shows that the net financing scale of government bonds in April was approximately 900 billion yuan, an increase of nearly 1 trillion yuan YoY. The net financing scale of corporate bonds in April was approximately 272.4 billion yuan, an increase of nearly 100 billion yuan YoY.

Looking ahead to the whole year, Liao Zhiming, Chief Fixed-Income Analyst at Huayuan Securities, expects new loans to increase slightly YoY, net financing of government bonds to expand significantly YoY, and TSF to increase YoY. The TSF growth rate may rebound first and then pull back, with the year-end TSF growth rate expected to be around 8.3%.

Regarding the M1 growth rate, Liao Zhiming stated, "Since Q4 2024, the M1 growth rate under both the old and new definitions has rebounded significantly, reflecting gradual improvement in economic activity." He expects the M1 growth rate under the new definition to be 2.1% in April, rebounding MoM, while the M2 growth rate in April will be 7.4%, rising slightly.

The YoY growth rate of CPI in April may decline, while the YoY decline of PPI may continue to widen.

In March, CPI declined by 0.1% YoY, with the decline narrowing by 0.6 percentage points compared to February, marking the second consecutive month of decline. The core CPI, excluding food and energy prices, turned from a 0.1% YoY decline to a 0.5% YoY increase, with the growth rate rising by 0.6 percentage points.

From a YoY perspective, market institutions forecast the median CPI in April to be -0.2%, with forecasts ranging from -0.3% to 0.1%.It is worth noting that over 80% of market institutions expect the CPI in April to remain negative.

Regarding the pressure on the CPI in April, Cai Hanpian from the National School of Development at Peking University told a reporter from Cailian Press, "Currently, the growth rate of food prices has risen slightly. However, due to the impact of Trump's high tariffs, some goods have shifted from exports to domestic sales, increasing the supply of non-food consumer goods. At the same time, export enterprises are facing short-term pressure, affecting employment and income expectations in this sector, thereby pulling down the YoY growth rate of the CPI."

Looking ahead, Sun Binbin, Chief Economist and Business Director of the Caitong Securities Research Institute, predicts that due to an increase in the number of pigs ready for slaughter, the short-term increase in supply will suppress the rise in pork prices, while fresh vegetable prices will continue to decline seasonally. The YoY CPI for May-June is expected to be -0.3% and -0.2%, respectively.

In terms of PPI, in March, the PPI fell by 2.5% YoY, with the decline widening by 0.3 percentage points. The median forecast for the YoY PPI in April among participating institutions is -2.8%, with a forecast range of -3.0% to -2.3%. Among them, nearly 60% of market institutions' forecasts fall at -2.8%.

Industry analysts suggest that the wider YoY decline in PPI in April may be mainly due to tariff impacts. The Chief Economics Team of China Minsheng Bank pointed out in a research report that under the influence of the US's unexpected tariff policies, market panic has spread, and commodity prices have come under pressure, leading to a decline. The average CRB commodity price index in April fell by 3.3% MoM from the previous month, which will drive down prices in related domestic industries.

Domestically, from an industry perspective, price declines in most upstream raw material industries have widened, including petroleum, coking coal, non-ferrous metals, and ferrous metals. Prices of mid- and downstream chemical products remain generally weak. Among them, the average monthly closing price of rebar futures fell by 3.3% MoM, and the average monthly closing price of glass futures fell by 2.9% MoM.

In the sub-indices of the April manufacturing PMI, the index for the purchase prices of major raw materials pulled back by 2.8 percentage points to 47.0%, while the ex-factory price index pulled back by 3.1 percentage points to 44.8%. The decline in purchase prices was slightly less than that in ex-factory prices, reflecting greater downward pressure on mid- and downstream prices.

In Liao Bo's view, changes in PPI are mainly influenced by the imported impact of downward fluctuations in international crude oil prices on China, as well as accelerated technological progress in some domestic industries and intense market competition pressure. However, with the gradual implementation and effectiveness of domestic policies such as large-scale equipment upgrades and trade-in policies for consumer goods, they will provide certain support for prices in some industries.