OREANDA-NEWS. Fitch Ratings has published an updated issue of its Mainland China exposure (MCE) data file, which tracks key data series on a global, Hong Kong system and individual bank level with data up to end-June 2015.

The world's China exposure decreased by 3% to USD1.8trn in the first six months in 2015. The decline was most pronounced in Europe (-11% to USD157bn), while the MCE for APAC excluding Hong Kong remained stable at USD384bn. Fitch has incorporated in this updated issue USD153bn of off-balance sheet items on top of foreign banks' USD1.7trn MCE to capture potential exposures from derivative contracts, guarantees and credit commitments.

The end-June 2015 data series also shows an overall decline in MCE for Hong Kong at both the system and individual bank level. Hong Kong system's MCE declined to 30.5% of assets from 31.2% a quarter earlier, although the total exposure of USD862bn remains at a high level compared with other countries.

With recent turbulence in China's stock market and slowing economic growth, it is likely that banks' MCE will fall further over the coming quarters, but we believe that it will continue to grow over the medium term.

The decline in Hong Kong bank's MCE by 2.3% in 1H15 compared with end-2014 was due to a 20% decline in claims on Mainland banks while non-bank exposure continued to grow healthily at 7%. Most Hong Kong banks' MCE have decreased, even though corporate lending has continued to increase steadily.

The data series for the Hong Kong banks now combines their Mainland China activities (previously non-bank MCE) and claims on Chinese banks. Refinements in definitions and more transparent disclosures have helped to eliminate double-counting of banks' claims on Chinese non-bank financial institutions.