Chinese officials said they would scrutinize gains in stock prices without capping new lending after a record US$1.1 trillion of loans in the first half added to credit risks and threatened to cause asset bubbles.
The government wants stock market stability and is studying share price advances, Chinese Vice Finance Minister Ding Xuedong (丁學東) said at a press briefing in Beijing yesterday.
The People’s Bank of China has a range of tools to limit money supply, Su Ning (蘇寧), a deputy governor of the central bank, told the briefing.
The Shanghai Composite Index has rallied 79 percent this year and real-estate prices have rebounded, fueling concern that loans meant for infrastructure projects are being used for speculation. The government wants to cool asset markets without derailing the recovery of the world’s third-biggest economy, which grew 7.9 percent in the second quarter from a year earlier.
Shanghai’s benchmark stock index closed down 2.9 percent yesterday, before the briefing started, for the worst weekly loss since February. The measure fell by the most in eight months on July 29 amid concern that the central bank would rein in liquidity.
The government will monitor asset prices and create an “internal mechanism” to stabilize the stock market, Ding said, without elaborating.
The central bank will not consider asset prices when adjusting policies, said Su, who also elaborated on a reference in a quarterly monetary policy report to “fine tuning” policy, saying that this happened continuously.
“It’s not the policies that will be fine tuned, but the focus, intensity and pace of policies that will be fine tuned,” the central banker said.
The surge in loans in the first half was helped by the rollout of the government’s stimulus plan and lending won’t grow as quickly in the second half, Su said.
The government will maintain a moderately loose monetary stance and an expansionary fiscal policy as domestic and external demand remain weak, Zhu Zhixin (朱之鑫), vice chairman of the National Development and Reform Commission, told the briefing.
Inflation isn’t a concern, Su said.
“Harsh lending curbs would just hurt the economy,” said Sherman Chan (陳穎嘉), an economist with Moody’s Economy.com in Sydney.
She said the government would do more to monitor lending.
China’s banking regulator urged lenders on July 27 to ensure credit for investment projects flows into the real economy. Three days later, the regulator announced plans to tighten rules on working capital loans.
China Construction Bank Corp (中國建設銀行) president Zhang Jianguo (張建國) said on Thursday that the nation’s second-largest bank would cut new lending by about 70 percent in the second half to avert a surge in bad debt.
Construction Bank plans to extend about 200 billion yuan (US$29 billion) in loans, down from 708.5 billion yuan in the preceding six months. The company’s new lending through June 30 was 42 percent more than for all of last year.
“We noticed that some loans didn’t go into the real economy,” Zhang said in an interview at the bank’s headquarters in Beijing.
“I feel that some industries are expanding too rapidly. For example, housing prices are rising too fast, and housing sales are growing too fast,” Zhang said.
Investors are split on whether a stock bubble is a threat.
“This is a recovery story that is one of the strongest and most convincing in the world,” Chen Li (陳立), a Beijing-based strategist at Harvest Fund Management Co (嘉實基金管理公司), which oversees about US$22 billion, said on Tuesday. “I don’t think we’re in a bubble.”
Credit Suisse Group AG said this week that it would be difficult to prevent a “huge and damaging bubble from emerging” without monetary tightening.
RECOVERED CONFIDENCE: As market rationality returns, Taiwanese stocks that have lagged behind their US peers might soon catch up, Allianz researchers said Local shares last week defied heavy pressure from China’s military drills in waters around Taiwan, and investors this week are expected to pay attention to earnings results from several tech heavyweights as well as the latest economic data on exports and GDP. The TAIEX closed at 15,036.04 points on Friday, posting a weekly increase of 0.24 percent from 15,000.07 on July 29, Taiwan Stock Exchange data showed. Over the same period, the FTSE TWSE Taiwan 50 Index, which comprises Taiwan’s top 50 stocks in terms of market capitalization, closed up 0.93 percent at 11,750.15 points, while the Formosa Stock Index, which measures
Pharmaceutical start-up AcadeMab Biomedical Inc (研生生醫) said it has been developing a COVID-19 antibody drug, an endeavor not being undertaken by many other Taiwanese pharmaceutical firms. The company was spun off from Academia Sinica’s Institute of Cellular and Organismic Biology in 2020 and has only 16 employees. It has set its sights on the innovative field of the monoclonal antibody treatment of tumors. The start-up began developing antibody drugs in January, after seeing that COVID-19 vaccines could not effectively protect people from new variants of SARS-CoV-2, AcadeMab Biomedical chief strategy officer Pearl Fong (俸清珠) said in an interview with the Taipei Times
FORECAST EXCEEDED: China’s curbs on some Taiwanese goods are unlikely to affect trade given inter-reliance in the electronics industries, a finance ministry official said Exports last month spiked 14.2 percent to US$43.32 billion, the second-highest increase on record and the 25th consecutive month of gains, driven by global demand for electronics used in high-performance computing and vehicles, the Ministry of Finance said yesterday. The ministry expects the trend to sustain this month and beyond, although the pace could slow due to inventory corrections for laptops, smartphones and other consumer electronics. “The July results proved stronger than expected despite rising fears over economic uncertainty,” Department of Statistics Director-General Beatrice Tsai (蔡美娜) said, adding that a high sales season in the West and stabilized COVID-19 infections in China
Government officials and business representatives yesterday participated in a groundbreaking ceremony at the Nanzih Technology Industrial Park (楠梓科技產業園區) in Kaohsiung, where Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is to construct a 12-inch wafer plant. The 238-hectare park sits on the former site of a naphtha cracking plant owned by state-owned oil refiner CPC Corp, Taiwan (台灣中油). Thirty hectares of the first phase of development are reserved for TSMC’s planned factory, while the second phase is to be occupied by international semiconductor material and equipment companies, the Executive Yuan said in a statement yesterday. “The park will be connected with Tainan Science Park