China: Credit growth sinks to a new record low in September as private demand stays weak

New aggregate financing (AF) in September came in slightly above market expectations, but outstanding AF growth slowed to a fresh record low of 7.1% y-o-y. New RMB loans remained the primary drag, with outstanding RMB loan growth falling further to a record low of 4.8% y-o-y, while government bond financing regained momentum and corporate bond financing turned negative. Household borrowing stayed extremely weak across both short- and long-term loans, suggesting depressed consumer confidence and the prolonged property downturn continue to weigh on credit demand. Corporate loans rose above their year-ago level, but only because of stronger bill financing, as both short- and medium- to long-term borrowing remained subdued. On 29 September, the PBoC cut the 1-year PSL rate by 25bp to 1.50%, expanded PSL eligibility and increased targeted re-lending quotas by a combined RMB700bn, avoiding policy rate and RRR cuts, which reinforces the view of no policy rate or RRR cut for the rest of the ye