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Slower october loans will not derail china recovery

´╗┐China's banks lent more slowly than markets expected in October, signaling that private sector credit may be relatively tight despite total financing in the economy being on track to hit a record high in 2012. New yuan loans, outstanding credit, M2 money supply and total social financing all came in below consensus forecasts in the benchmark Reuters poll, but analysts said aggregate levels of credit were likely adequate to support a rebound in economic growth signaled by a raft of other indicators last week."October new yuan lending is weaker than expected. But the overall social financing is on track to exceed 14 trillion yuan this year - a record high. That will provide enough support for the economy," Zhou Hao, an economist at ANZ Bank in Shanghai, told Reuters. China's banks extended 505.2 billion yuan ($81.5 billion) of new local currency loans in October, central bank data showed on Monday, but missing market expectations of 600 billion yuan. Total social financing, a broad measure of liquidity in the economy, stood at 1.29 trillion yuan, down from 1.65 trillion yuan in September. The moderating credit data followed a flurry of factory output, investment and trade statistics last week that signaled the world's second-largest economy was striding further along the road of recovery, and shows that Beijing cannot yet relax efforts to boost growth from its weakest in three years. Nie Wen, an analyst with Hwabao Trust in Shanghai, said a year-on-year decline of 2.3 percentage points in the rate of growth of M1 in October signaled that liquidity in the real economy was tight."That is not good for a recovery in private-sector investment," Nie said.

But while the data suggested Beijing may need to do more to ensure policy is loose enough to spur growth in the private sector, economists said the uptick in total social financing was the more significant measure, indicating more widespread use of credit beyond bank lending in channels that were likely to be tapped to fund government-mandated infrastructure investments."Take trust loans for example. Since August we have seen quick expansion of trust loans," said Dongming Xie, an economist at OCBC Bank in Singapore."This may due to rising investment activities from local government level. But this was not captured in new yuan loan (data)."MONETARY POLICY CENTREPIECE Bank lending is a centerpiece of China's monetary policy, given that it is controlled by Beijing in order to manage inflation and economic growth.

The October new loan data - released on the People's Bank of China website this site - implies total lending is on course to exceed 8.5 trillion yuan in 2012. This is expansionary versus the 7.5 trillion of new loans extended in 2011 and above the 8 trillion yuan that sources told Reuters back in February was the target for 2012. China's cabinet said last month it will provide a "reasonable" amount of credit in the fourth quarter to spur activity and speed construction of key projects. After easing monetary policy earlier in the year, credit supply has increased while inflation has stayed low, allowing Beijing to hold off on additional pro-growth measures.

Some analysts think that may change later this month after the ruling Communist Party's congress selects a new leadership in a once-in-a-decade handover of power, enabling a new top team to deliver a growth spurt at the start of its time in charge of the world's second-biggest economy. China's central bank chief, Zhou Xiaochuan, cautioned last week that external risks still loomed large and the People's Bank of China had policy room to respond if necessary. The PBOC cut interest rates in June and July and has lowered required reserve ratios

Vanguard, sifma back liquidity fees for money funds

´╗┐Jan 15 Asset manager Vanguard Group Inc and a major financial industry trade group on Tuesday said they could support certain "liquidity fees" on money market mutual funds, the latest steps as the $2.6 trillion industry seeks to stave off more sweeping regulations. Similar fees have previously have been suggested by BlackRock Inc as a way to protect money funds against sudden runs by investors. Both Vanguard and the trade group, the Securities Industry and Financial Markets Association (SIFMA), made their comments in letters to the U.S. Financial Stability Oversight Council. The risk council has received a flood of letters in response to broader rule changes it proposed, such as having the funds abandon their traditional fixed net asset value of $1 per share, or having them build up buffers. On Tuesday, the council said it will extend until mid-February a deadline for public comments. On Tuesday, Vanguard suggested a fee could be imposed on withdrawals from prime money market funds of between 1 to 3 percent in some cases, and that redemptions could be suspended temporarily. The fees would encourage other investors to stay put."The key to preventing a run on Prime MMFs from contributing to broader dislocations in the financial markets during a widespread crisis is to ensure that these funds have adequate liquidity, and have the ability to slow redemptions when a fund's liquidity becomes scarce," Vanguard wrote.

Regulators started looking at money market funds in September 2008 after the Reserve Primary Fund, one of the largest money funds at the time, suffered losses on Lehman Brothers debt and could not maintain its $1 per share net asset value, an event known as "breaking the buck."Because the money market funds play a crucial intermediate role as buyers of corporate debt their problems threatened to cause financial markets seize up. Similarly, SIFMA on Tuesday said the U.S. Securities and Exchange Commission could explore allowing "redemption gates," or prohibitions on withdrawals, accompanied by liquidity fees once the gates are lifted.

The letters from Vanguard and the trade group made clear they would prefer only small steps by regulators. Fund executives argue that changes made in 2010 have already made the funds more resilient, and they worry further new rules could drive away investors. Lately there have been signs companies have been trying to reach a compromise. Last week big money fund sponsors including leaders Fidelity Investments, JPMorgan Chase & Co,, Federated Investors and Goldman Sachs Group Inc all pledged more disclosure of money funds' daily values. [ID:nL1E9CBBFF ]

Led by the U.S. Treasury Department, the risk council proposed the reforms last year in an effort to pressure a divided SEC to take similar actions on its own after former Chairman Mary Schapiro failed to build a consensus from her colleagues over the summer. The comments that the risk council receives will inform its next steps. It cannot force the SEC to act but can pressure it via recommendations. So far the FSOC's ideas mostly mirror those of Schapiro. But with her departure last month the commission is divided between two Democrats and two Republicans. The two Republicans, Daniel Gallagher and Troy Paredes, have said they would be open to an alternative rule that would permit board directors to limit withdrawals -- like SIFMA's "gates" -- in times of stress. A Democratic skeptic of Schapiro's efforts was SEC Commissioner Luis Aguilar. More recently Aguilar has said he might support some reforms based on an SEC economic analysis. var $relatedItems = $('lia "/article/autosalesusa-top-idUSL4N1EU3Z5"TABLE- Top 20 selling vehicles in U.S. in December/a/lilia "/article/idUSFWN1EU0LP"BRIEF-Perceptive Advisors LLC reports purchase of 94,750 shares of Versartis\' common stock on Dec 30, 2016 at $14.66 per share - SEC filing/a/li'), $relatedItems = $relatedItems.slice(0,10), relatedBlockLimit = Number('6'), relatedItemsTotal = $relatedItems.length, $paragraphTags = $('#article-text p'), contentParagraphs = 0, minParagraphs = Number("8"); for (i=0; i $paragraphTags.length; i++) { if ($paragraphTags[i].innerText.trim().length 0) { contentParagraphs = contentParagraphs + 1; } } if (contentParagraphs minParagraphs) { setTimeout(function(){ if (relatedItemsTotal relatedBlockLimit) { $('.first-article-divide').append('div class="related-content group-one"h3 class="related-content-title"Also In Funds News/h3ul/ul/div'); $('.second-article-divide').append($('.slider.slider-module')); $('.third-article-divide').append('div class="related-content group-two"h3 class="related-content-title"Also In Funds News/h3ul/ul/div'); var median = (relatedItemsTotal / 2); var $relatedContentGroupOne = $(' ul'); var $relatedContentGroupTwo = $(' ul'); $.each($relatedItems, function(k,v) { if (k + 1 = median) { $relatedContentGroupOne.append($relatedItems[k]); } else { $relatedContentGroupTwo.append($relatedItems[k]); } }); } else { $('.third-article-divide').append($('div class="related-content group-one"h3 class="related-content-title"Also In Funds News/h3ul/ul/div')); $('.related-content ul').append($relatedItems); } },500); } Next In Funds News UPDATE 1-Apple confirms $1 bln investment in SoftBank tech fund Jan 4 Apple Inc confirmed on Wednesday its plans to invest $1 billion in a tech fund being set up by Japan's SoftBank Group Corp. Apple confirms $1 bln investment in SoftBank tech fund - WSJ Jan 4 Apple Inc confirmed its plans to invest $1 billion a tech fund being set up by Japan's SoftBank Group Corp, the Wall Street Journal reported on Wednesday. BRIEF-Apple confirms $1 bln investment in Softbank Vision Fund - Nikkei * Apple confirms $1 billion investment in Softbank Vision Fund - Nikkei MORE FROM REUTERS window._taboola = window._taboola || []; _taboola.push({ mode: 'organic-thumbnails-a', container: 'taboola-recirc', placement: 'Below Article Thumbnails - Organic', target_type: 'mix' }); Sponsored Content @media(max-this site) { #mod-bizdev-dianomi{ height: 320px; } } From Around the Web Promoted by Taboola window._taboola = window._taboola || []; _taboola.push( { mode: 'thumbnails-3X2', container: 'taboola-below-article-thumbnails', placement: 'Below Article Thumbnails', target_type: 'mix' } ); window._taboola = window._taboola || []; _taboola.push