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China’s April new yuan loans seen falling, policy support in place- Reuters poll
BEIJING (Reuters) – China’s new yuan loans likely dropped sharply in April from March due mainly to seasonal factors, a Reuters poll showed, even as the central bank keeps policy support for the economy.
Chinese banks are expected to have issued 800 billion yuan ($110.7 billion) in net new yuan loans last month, compared with 3.09 trillion yuan in March, according to the median estimate in the survey of 21 economists.
But the expected new loans would be higher than 718.8 billion yuan issued in the same month a year earlier.
The People’s Bank of China (PBOC) is expected to release April credit data between May 10 and 15.
“April is a low season for new credit,” analysts at Citi said in a note. “Even with the PBOC’s new re-lending tool, new RMB loans could stay low at 800 billion yuan in April amid property weakness.”
China’s central bank said last month that it would set up a 500-billion yuan re-lending programme to support the country’s science and technology sectors.
China’s economy grew 5.3% in the first quarter, faster than expected, offering some relief to officials as they try to shore up growth in the face of protracted weakness in the property sector and mounting local government debt. However, some March indicators showed that demand at home remains frail, weighing on overall momentum.
The Communist Party’s top decision-making body, the Politburo, said in late April that China would step up support for the economy with prudent monetary and proactive fiscal policies, including interest rates and bank reserve requirement ratios (RRR).
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China will issue ultra-long term special treasury bonds as soon as possible and speed up the issuance of local government special bonds to maintain the necessary intensity of fiscal expenditure, it said.
China has pledged that the growth of total social financing (TSF), a broad measure of credit and liquidity, and money supply will match expected goals on economic growth and inflation this year.
Outstanding yuan loans were expected to grow by 9.7% in April from a year earlier, up from 9.6% in March, the poll showed. Broad M2 money supply growth in April was seen at 8.3%, the same as in March.
Any acceleration in government bond issuance could help boost total social financing (TSF), a broad measure of credit and liquidity.
Outstanding TSF was 8.7% higher at the end of March than a year earlier, growing slower than the 9.0% annual rate seen at the end of February.
In April, TSF is expected to fall to 1.00 trillion yuan from 4.87 trillion yuan in March.
($1 = 7.2241 renminbi)
FRANKFURT (Reuters) – Europe must work more closely on defence projects and raise investment in production capacity, the chief executive of Airbus told a German newspaper.
Guillaume Faury told Frankfurter Allgemeine Zeitung that the European Union was buying five times less armaments than the United States and that up to three quarters of those were not produced in Europe but mostly in America.
“There is too little investment in production capacities here and in the end quickly available armaments are procured in the United States,” he said. “Politicians should not only look at how they can cover their needs in the short term.”
Faury also called for closer defence cooperation with Britain, which is developing the GCAP jet fighter project with Italy and Japan, while France, Germany and Spain are pursuing the so-called FCAS jet project.
Airbus is involved in FCAS alongside France’s Dassault Aviation with which it reached an agreement on the development of a demonstrator in 2022.
“It is conceivable, for example, to consider standardising the IT systems for FCAS and GCAP at some point,” said Faury, adding this would ensure interoperability at a NATO level.
“I also think we need a security and defence agreement between the EU and the UK,” Faury said.
By Christoph Steitz and Christian Kraemer
FRANKFURT, Germany (Reuters) -A firefighter died while trying to rescue trapped residents and several thousand people were forced to leave their homes as heavy rain caused flooding in southern Germany.
The 42-year-old man who died was in a rescue boat carrying four firefighters that capsized late on Saturday. His body was recovered early on Sunday, said a spokesperson for the Bavarian town of Pfaffenbach an der Ilm, around 50 km (30 miles) north of Munich.
Municipalities had days to prepare for the flooding but around 3,000 people had to be evacuated in southern Germany as the water cut off some areas, authorities said.
“We owe our thanks and respect to the rescue workers and helpers who are battling the consequences of the floods in many places,” Chancellor Olaf Scholz said on X.
Scholz is scheduled to travel to the region on Monday, where he will meet with Interior Minister Nancy Faeser and Bavaria’s premier at around 1100 CET to get an overview, a government spokesperson said.
Economy Minister and Vice Chancellor Robert Habeck pledged support for the affected regions during a visit on Sunday and noted that climate change is causing more severe weather events.
“Natural disasters have always accompanied mankind. What we are seeing is that the frequency of these events is increasing significantly. Record floods occur every few years … record rainfall every few years,” Habeck, of the Greens Party, told broadcaster n-tv.
Parts of Europe were hit by major flooding in 2021 that killed nearly 200, with Germany bearing the brunt. The disaster was largely blamed on the consequences of climate change and prompted calls for stricter warning and safety measures.
By Ahmad Ghaddar, Alex Lawler and Maha El Dahan
LONDON/DUBAI (Reuters) -OPEC+ agreed on Sunday to extend most of its deep oil output cuts well into 2025 as the group seeks to shore up the market amid tepid demand growth, high interest rates and rising rival U.S. production.
prices have been trading near $80 per barrel in recent days, below what many OPEC+ members need to balance their budgets. Worries over slow demand growth in top oil importer China have weighed on prices alongside rising oil stocks in developed economies.
The Organization of the Petroleum Exporting Countries and allies led by Russia, together known as OPEC+, have made a series of deep output cuts since late 2022.
OPEC+ members are currently cutting output by a total of 5.86 million barrels per day (bpd), or about 5.7% of global demand.
Those include 3.66 million bpd of cuts, which were due to expire at the end of 2024, and voluntary cuts by eight members of 2.2 million bpd, expiring at the end of June 2024.
On Sunday, OPEC+ agreed to extend the cuts of 3.66 million bpd by a year until the end of 2025 and prolong the cuts of 2.2 million bpd by three months until the end of September 2024.
OPEC+ will gradually phase out the cuts of 2.2 million bpd over the course of a year from October 2024 to September 2025.
“We are waiting for interest rates to come down and a better trajectory when it comes to economic growth … not pockets of growth here and there,” Saudi Energy Minister Prince Abdulaziz bin Salman told reporters.
OPEC expects demand for OPEC+ crude to average 43.65 million bpd in the second half of 2024, implying a stocks drawdown of 2.63 million bpd if the group maintains output at April’s rate of 41.02 million bpd.
The drawdown will be less when OPEC+ starts phasing out the 2.2 million bpd voluntary cuts in October.
The International Energy Agency, which represents top global consumers, estimates that demand for OPEC+ oil plus stocks will average much lower levels of 41.9 million bpd in 2024.
“The deal should allay market fears of OPEC+ adding back barrels at a time when demand concerns are still rife,” said Amrita Sen, co-founder of Energy Aspects think tank.
Prince Abdulaziz said OPEC+ could pause the unwinding of cuts or reverse them if demand wasn’t strong enough.
QUICK DEAL
Analysts had expected OPEC+ to prolong voluntary cuts by a few months due to falling oil prices and sluggish demand.
But many analysts had also predicted the group would struggle to set targets for 2025 as it had yet to agree individual capacity targets for each member, an issue that had previously created tensions.
The United Arab Emirates, for instance, has been pushing for a higher production quota, arguing its capacity figure had been long under-estimated.
But in a surprise development on Sunday, OPEC+ postponed the discussions on capacities until November 2025 from this year.
Instead, the group agreed a new output target for the UAE which will be allowed to gradually raise production by 0.3 million bpd, up from the current level of 2.9 million.
OPEC+ agreed that it would use independently assessed capacity figures as guidance for 2026 production instead of 2025 – postponing a potentially difficult discussion by one year.
Prince Abdulaziz said one of the reasons for the delay was difficulties for independent consultants to assess Russian data amid Western sanctions on Moscow for its war on Ukraine.
The meetings on Sunday lasted less than four hours – relatively short for such a complex deal.
OPEC+ sources said Prince Abdulaziz, the most influential minister in the OPEC group, had spent days preparing the deal behind the scenes.
He invited some key ministers – mostly those who contributed to the voluntary cuts – to come to the Saudi capital Riyadh on Sunday despite meetings being largely scheduled online.
The countries which have made voluntary cuts to output are Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates.
“It should be seen as a huge victory of solidarity for the group and Prince Abdulaziz,” said Sen, adding the deal would ease fears of Saudi Arabia adding barrels back due to Aramco (TADAWUL:)’s share listing.
Saudi Arabia’s government has filed papers to sell a new stake in state oil giant Aramco that could raise as much as $13.1 billion, a landmark deal to help fund Crown Prince Mohammed bin Salman’s plan to diversify the economy.
OPEC+ will hold its next meeting on Dec. 1, 2024.
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