China SMEI: Downtrend resumes – Standard Chartered

Lan Shen, Economist at Standard Chartered, notes that the headline SMEI (Bloomberg: SCCNSMEI <Index>) – based on their monthly China SME survey – eased to 55.6 in September from 56.6 in August.

Key Quotes

“The ‘expectations’ sub-index fell the most, followed by the ‘current performance’ and ‘credit’ sub-indices, reflecting continued downward pressure on real activity.”

“Sales were sluggish on slowing domestic demand and increasing export uncertainty, according to our survey results.”

“The credit conditions sub-index edged down 0.4ppt in September after rising 1.8ppt in August, suggesting no easy fix for SMEs’ financing problems as banks’ risk appetite remains low. However, the rise in borrowing costs for SMEs slowed notably; non-bank financing costs for services-sector SMEs fell for the first time in almost three years, according to our survey.”

“The central bank has pledged to enhance support for SMEs by further improving financing services and reducing operational burdens. Market sentiment towards the Chinese yuan (CNY) appears anchored for now.”