"Next week in China" fra Lundgreen's Capital

Major Data Releases:

• 13 August: China to report July M0, M1 and M2 money supply growth rates
• 13 August: China to report July Total Social Financing (TSF)
• 13 August: China to report July new renminbi loans
• 13 August: Hong Kong to report July external merchandise trade volumes
• 14 August: China to report July total electricity consumption
• 14 August: Hong Kong to report revised figures for Q2 2026 Gross Domestic Product

Major data releases for China markets will focus on financial indicators next week, with July credit and TSF figures among the key data points to watch.

For new RMB loans, we expect a seasonal pullback for July credit, with a flat year-on-year increase likely but the underlying structure remaining weak. New loans reached RMB 1.61 trillion (USD 238.6 billion) in June, down by 39 per cent from a year earlier. Entering July, the manufacturing PMI fell more than expected, most production-side operating rates moved lower, and real-economy financing demand remained subdued. However, the negative new-loan reading last year creates a low base while bill financing may also provide some support. We expect new RMB loans to increase by a modest RMB 50 billion (USD 7.4 billion) year-on-year, with growth in outstanding loans likely to continue slowing from 5.2 per cent in June to around 5.1 per cent in July.

Corporate credit is likely to decline month-on-month with loans weakening from a year earlier amid a contraction in manufacturing activity, softer commodity prices and declining operating rates. Short-term financing demand and corporate expectations remained weak, suggesting that business loans may fall month-on-month and year-on-year. Infrastructure physical workload has improved only modestly, while real estate investment remains at a low level. These suggest that demand for medium- to long-term corporate financing has not yet recovered meaningfully, and such loans are also likely to fall.  

Household credit is also expected to weaken in July. Passenger car retail sales were below seasonal levels while box office revenue and metro passenger traffic were both broadly in line with seasonal patterns, indicating that consumer credit demand remains soft. New home transactions strengthened marginally in late July and second-hand home sales in key cities improved year-on-year. However, the stabilisation in the property market remains fragile so the recovery in mortgage demand may be limited. Bill financing should remain the main support for credit, while overseas and non-bank loans are likely to maintain positive growth.

For TSF, we expect new aggregate financing to the real economy to reach around RMB 980 billion (USD 145 billion) in July, down by about RMB 150 billion (USD 22 billion) from a year earlier but posting growth of around 7.4 per cent. Government bond financing should remain the main support, while on-balance-sheet RMB loans and non-standard financing are likely to drag down the aggregate figure. Central and local government bond supply is expected to stay elevated. The corporate credit bond issuance environment should remain relatively stable with some year-on-year increase, while total direct financing is likely to be broadly in line with last year’s levels.

Chinese equities recovered over the past week. As of Thursday, 6 August, the MSCI China Index was up 0.49 per cent, while the Shanghai Composite was up 1.78 per cent. The Shenzhen Component and ChiNext indices increased by 3.91 per cent and 5.13 per cent, respectively. Small caps slightly outperformed mid- and large-cap peers, while growth outpaced value.

Market consensus has yet to fully form in the near term, and the key window for a trend-driven rebound may come in late August. Interim results and redemption pressure during the rebound will be important in determining whether the technology sector can enter a new main upward phase. Over the medium term, evidence remains insufficient that the second wave of the AI trend has reached an inflection point. From an allocation perspective, focus should shift from investment scale to revenue realisation, with further concentration toward areas with stronger earnings visibility and lower positioning and valuation pressure.

This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.

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