Janus Henderson Investors: Chinese credit conditions still tight

The CKGSB corporate sales index correlates with official and Markit manufacturing PMIs and fell back in December after a modest three-month rise – see first chart.

Monetary trends were recovering in early 2019 but went into reverse post-spring as secondary banking problems caused a tightening of credit conditions. This tightening was reflected in a sharp fall in the CKGSB corporate financing index – which measures the ease of obtaining external funds – from an April peak. The index slid further to an 11-month low in December – second chart.

The Chinese PMI pick-up has contributed to a recent revival in optimism about global economic prospects, with commentators noting that Chinese manufacturing PMIs have tended to lead the global Markit measure in recent years – third chart. The common driver, however, may be Chinese real money trends, with very different implications – fourth chart.