Bloomberg’s Chart Of The Day shows that China’s loan growth might not be as bubbly as some presume:
The CHART OF THE DAY shows deposits at the four largest listed banks grew by 4.3 trillion yuan ($630 billion) in the first half of 2009, according to data from company filings compiled by Bloomberg. That’s more than the 3 trillion-yuan increase in loans from the same banks, Bloomberg data show.
The steeper rise in deposits suggests many state-owned Chinese companies haven’t spent their loans yet, said Henderson’s Andrew Beal. The money manager’s view contrasts with warnings from CLSA Ltd. strategist Christopher Wood and former Morgan Stanley economist Andy Xie that borrowed money may be spurring asset bubbles. The Shanghai Composite Index jumped 69 percent this year, while home sales surged 73 percent in the first nine months of 2009 from a year earlier.
Predictions that most of this year’s new lending by banks “has gone straight into the economy, equity markets and property markets don’t tell us the facts,” said Beal, who helps manage $3 billion as Henderson’s director of pan-Asian equities in London. “Most of that went straight back to deposits.”
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Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.