QuarterlyChinaShadowBankingMonitorMARCH,2019QuarterlyChinaShadowBankingMonitor,March20192QuarterlyChinaShadowBankingMonitor1.KeyMessages2.CreditConditions(a)LiquidityConditions(b)FinancingConditionsforCorporates3.CompositionandTrendsofShadowBanking(a)WealthManagementProducts(b)TrustSector4.InterconnectednessandSpilloverRiskstoBanks5.TheGrowthofE-finance6.RegulatoryUpdates&MarketEvents7.Appendix:Glossary,NotesonEstimates&DataSources1KeyMessagesQuarterlyChinaShadowBankingMonitor,March20194KeyMessages»TheshadowbankingsectorshrankbyRMB4.3trillionin2018toendtheyearatRMB61.3trillion,itssmallestsincetheendof2016orjustbeforetheregulatorycrackdownonthesectorbegan.Thecontractionin2018wasconcentratedincoreshadowbankingactivitiesincludingtrustloans,entrustedloansandundiscountedbankers’acceptances.ThesethreeactivitiesreportedacombineddeclineofRMB2.9trillionintheyear.»ThebroadshadowbankingsectorasashareofGDPhasshrunkbynearly20percentagepointsto68%attheendof2018fromitspeakof87%twoyearsago.2018markedthefirstannualcontractionforbroadshadowbankingassetsinbothabsoluteandGDPtermsoverthepastdecade.Interconnectednessamongfinancialinstitutionsalsodeclinedintheyear,asreflectedina63%contractioninoutstandingWMPspurchasedbyinterbankinvestorsanda34%contractionincommercialbanks’netclaimsonnon-bankfinancialinstitutions(NBFIs).»Monetarypolicyrelaxationhasledtoeasierliquidityandcorporatefundingconditions,butcreditgrowthremainslacklusterandisweightedtoshortermaturities.Formalbanklendingaccountedforvastmajorityofouradjustednewtotalsocialfinancing(TSF)flowsin2018.Weexpecttheongoingrotationofnewcreditsupplybacktobanks’loanbookswillcontinuein2019.However,riskaversionofbanksandbondinvestorsremainshighaseconomicgrowthslows.Strongerbanklendinginthepastfewmonthshasbeenincreasinglydrivenbyshort-termbillfinancing.Inthebondmarket,corporatebondyieldspreadsofissuerswithlowerdomesticcreditratingsremainelevated.»POEs(PrivatelyOwnedEnterprises)haveexperiencedthegreatestdisruptiontocreditavailabilityfromt...
