(Yicai Global) Sept. 8 -- According to the "Monthly Research of Chief Economists in Yicai" in Aug., the "Confidence Index of Chief Economists in Yicai" in Sept. 2016 continues to rise since July of this year and is above the 50 line. Among these economists, the proportion with a predicted value below 50 has visibly decreased to 23 percent from 66.7 percent in July, indicating that China's economy will gradually turn around and stabilize in the future.
The "Confidence Index of Chief Economists in Yicai" in Sept. 2016 is 50.07, which exceeds 50 for the second time and is the second highest value ranked behind the index in May of this year.
Economists no longer hold the prevalent view that CNY will depreciate, and the average predicted value of the exchange rate between CNY and USD at the end of the year is 6.75. Economists engaged comprise one thirds with the prediction that the exchange rate of CNY in the end of this year will enjoy a certain appreciation compared with the exchange rate in that month (the middle rate of CNY against USD on Aug. 31 was 6.69), while only one economist held this view last month.
On interest rates and reserve requirement ratios, the research shows little chance of an interest reduction. Possible reduction of required reserves resulted in the re-initiation of a 14-day buy-back by the People's Bank of China on Aug. 24 to lead a rise in capital costs and prompt financial institutions to lower the leverage. The re-initiation also offered more adequate liquidity for the interbank market. Against such a background, the 20 chief economists giving the prediction of benchmark interest rate of loans and deposits held the common view that, by the end of Sept., the benchmark interest rate for loans and deposits will have no fluctuations. In terms of the reserve requirement ratio, 18 economists give their predictions, wherein five of them expect a decline in the end of Sept., while others opine that no changes will occur before Oct. 2016.
July saw a big decline in the newly increased debt, which hit the lowest level in recent years. However, economists predict the newly-increased debt in Aug. to be USD 106 billion (CNY 725.635) billion on average, a sharp increase compared with the statistics in July (official statistics record CNY 463.6 billion). The predicted mean value for social financing and the increasing rate of M2 in August is CNY 0.91 trillion and 10.53 percent, respectively. Both signal a rebound from the July figures (the social financing being CNY 0.488 trillion and the increasing rate of M2 being 10.2 percent).
The research also shows that the predicted mean value for the official foreign exchange reserve in Aug. registered USD 3178.556 billion, a continuous decline compared with the Central Bank's July figure of USD 3201.057 billion, and dipping to the lowest level of the year.
In addition, economists put the year on year increase rate of CPI in Aug. at between 1.5 percent and 1.9 percent, with a predicted mean value of 1.66 percent, for a continuous decline compared with the July number (1.8 percent) released by the National Bureau of Statistics, and extends the declining trend of the past four months. While the predicted annual increase in the rate of PPI, ranges from -1.4 percent to -0.4 percent with the predicted average rate of -0.92 percent. The figure shows an obvious declining trend compared with -1.7 percent in July.
"Yicai Chief Economists Research Project" is sponsored and hosted by Yicai. The project brings in excellent chief economists from financial industries, such as Chinese-foreign banks, investment banks, securities traders, funds and insurance companies, and announces investigation plans for the economic situation and macro-policies each month.