Default Wave Waters Bond Market, Yicai Chief Economist Survey Shows
He Xiao
/SOURCE : Yicai
Default Wave Waters Bond Market, Yicai Chief Economist Survey Shows

(Yicai Global) June 6 -- As financial deleveraging gradually bites deeper, bond defaults have cropped up at companies with aggressive investments and those with over-leveraging, and the temporary rise in bond defaults will squeeze short-term economic growth, but ultimately benefit the bond market long-term by striking a balance between risks and returns.

The overall situation of bond defaults is controllable with but slim chance of the emergence of systemic financial risks, 12 chief economists told Yicai's chief economist survey last month.

These experts remain optimistic about economic growth next month, as the Yicai Chief Economist Confidence Index reading of 50.75 this month shows, though registering a slight dip from last month. The Index has stayed above 50 for consecutive twenty-two months, indicating ongoing expansion. Any reading below 50 signals contraction.

Last month's newly-added loans to be published this week will edge down from the CNY 1.18 trillion officially published in April to CNY1.13 trillion. Average social financing is forecast at CNY1.37 trillion, a drop from the CNY1.56 trillion in April published by the People's Bank of China. The annualized growth rate in the broad money supply (M2) was 8.5 percent last month, a rise over the published level (8.3 percent) in April posted by the central bank, economists forecast. Broad money is the calculation of a country's entire money supply.

Retail revenue from selling social consumer goods edged up last month, with a forecast annual average growth rate of 9.6 percent, higher than the 9.4 percent the National Bureau of Statistics of China posted in April.

The annual CPI growth rate remained stable last month, almost flat from the 1.8 percent the NBS reported in April. The yearly purchase price index growth rate will continue to rise to 3.93 percent from 3.4 percent in April, per projections.

The average growth rate of fixed asset investment was 6.99 percent, the economists also estimated. This is stable but marks a decrease from the 7 percent the NBS tallied in April.

The trade surplus will climb to USD32.92 billion last month from USD28.78 billion in April, per data the General Administration of Customs has issued. Imports and exports slipped over April, with annual export growth dropping from 12.9 percent then to 11.1 percent, and the annualized import growth rate down to 18.2 percent from 21.5 percent.

Editor: Ben Armour

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Keywords: Yicai Chief Economist Survey , Financial Deleveraging , Bond Default