Morgan Stanley-China Financials April TSF Shifting from quantity to quali...-108190963

MMay12,202408:47PMGMTMorganStanleyAsiaLimited+UpdateChinaFinancialsAsiaPacificRichardXu,CFA+8522848-6729+8523963-4624AprilTSF:ShiftingfromEquityAnalyst+8523963-2224quantitytoqualityRichard.Xu@morganstanley.comAttractiveWehadforecastthatTSFgrowthwouldtrendtowards8%inChiyaoHuang2024onpolicyshifttoqualityofcreditgrowth.WebelievethenegativeTSFnumberandM1growthinAprilwerepartlyduetoEquityAnalystthesqueezingoutofcreditsusedpurelytoinflatetheTSFChiyao.Huang@morganstanley.comnumberinpastyears,whichispositiveforbanks.BerylYangAprilnumbersshowpolicymakerswillingtotoleratenegativemonthlyTSFdataforqualityofcreditgrowth.PolicymakersreversedwindowguidancewithpoliciesResearchAssociatefocusingonsqueezingoutcreditsusedtoinflateTSFgrowthinthepastcoupleofBeryl.Yang@morganstanley.comyears,including:1)changingfinancialGDPcalculationsfromJan2024todiscouragelocalgovernmentsfrompushingcreditgrowthtomeetGDPgrowthtargets;2)ChinaFinancialsrequiringlargeSOEstocentralizefundinganddepositsatbanksviatheirgroupAsiaPacificfinancecompaniestodiscourageself-circulatingloansbetweenbanksandlargeIndustryViewSOEsvialowyieldloans,whichinturnbecomehigh-costdepositsbacktobanks;and3)repeatedcommentsfromthePBoConreducingthefocusonmonthlynewMorganStanleydoesandseekstodobusinesswithTSFgiventhealreadylargebaseofexistingcredits,whichcanbeoptimized.Thecompan...