Chart of the Day: This graph of loans to China spooked investors so much

Fidgety over impact on asset quality.

According to Maybank Kim Eng, Singapore banks are becoming more aggressive than foreign banks. Based on data from the Monetary Authority of Singapore (MAS), the rapid loan growth to China was largely fuelled by Singapore banks rather than foreign banks located in Singapore. 

This was hardly surprising as the balance sheets of foreign banks were severely hit by both the GFC and the Eurozone crisis.

Here's more from Maybank Kim Eng:

 

China’s clampdown on credit and tougher actions against shadow financing further led to a flourish of finance activities offshore.

 

This set the stage for Singapore banks to secure a slice of the trade financing pie.

China’s economic restructuring raises concern. In recent months, signs of stress have surfaced due to uncertain economic growth prospects in China amid unabated fears about its shadow banking system.

The recent default of the corporate bond issued by Shanghai Chaori Solar Energy Science & Technology Co, a solar company headquartered in Shanghai, added to the woes.

Singapore banks’ significantly higher lending exposure to China has made investors increasingly apprehensive over the impact on the banks’ asset quality.

DBS has largest exposure, OCBC has strongest loan growth.