Net new yuan bank loans to China’s nonbanking financial institutions in February surged to the highest level since July 2015, a sign that some of the loans could have been used by state-backed investors to prop up the stock market, according to analysts, reports Caixin. The loans reached RMB 404.5 billion ($56.9 billion) last month, more than 23 times the amount in February 2023 and the highest since July 2015, when the reading was RMB 886.4 billion, central bank data show. In contrast, net new yuan loans in total in February dropped almost 20% year-on-year.
In both February 2024 and July 2015, government-backed companies increased their holdings of stocks and equity-focused mutual funds in a bid to lift the stock market out of a slump, suggesting that state-buying could explain the spikes in new nonbanking loans, analysts said.
“Historical data show that the only time that new yuan loans to nonbanking financial institutions showed a sharp increase similar to that in February was in July 2015, when China Securities Finance Corp. Ltd. (CSF) expanded financing to boost stock market liquidity,” Guotai Junan Securities Co. Ltd. analysts wrote in a recent report, estimating that similar activities supported the increase in nonbanking loans in February.