Thu, Feb 27, 2020 @ 11:49 GMT
People’s Bank of China (PBOC) announced to cut 100 bps in the reserve requirement ratio (RRR), effective from April 25, for large commercial banks, joint-stock banks, city commercial banks, rural commercial banks, and foreign banks. While it would be...
China released its latest macroeconomic data for the first two months of the year. Due to Lunar New Year holiday, the January figures for retail sales, industrial production and fixed asset investment were not released. Despite signs of improvement,...
Headline inflation in China soared to +5.4% y/y, the highest level in almost a decade, in January. This came in higher than consensus of +4.9% and December’s +4.5%. Once again food, especially pork, price was the key driver of...
China’s GDP expanded +6.4% y/y in 1Q19, same pace as 4Q18 but beating consensus of +6.3%. Major macroeconomic data showed strong rebound in March and exceeded expectations. Over the past weeks, data flow in China has already signaled improvement...
For the first time in over 3 years, People’s Bank of China (PBOC) lowers the rate of the 1-year medium lending facility (MLF) by -5 bps to 3.25%. This surprising move underlines the rapid deterioration of domestic growth and...
Headline CPI in China accelerated further to +3.8% y/y in October. This had exceeded consensus of +3.4% and breached the 3% target for the first time since 2013. Food price, in particular pork price, was again the key driver...
The market was surprised to see that PBOC left the loan prime rate (LPR), its latest benchmark rate, unchanged in October following two consecutive cuts in the prior two months. Yet, this came in line with our expectations that...
China’s trade surplus widened to US$ 34B in October. Exports grew +15.6% y/y, beating consensus of +11.7% and September’s +14.5%. Import expanded +21.4% during the month, exceeding market expectations of +14.5% and +14.3% in September. Interestingly, the headline trade...
China’s macroeconomic data was mixed in April. Industrial production (IP) expanded +7% y/y, accelerating form +6% in March and consensus of +6.4%. Retail sales grew +9.4% y/y, easing from +10.1% in March. The market had anticipated a milder drop...
Notwithstanding disappointing headlines, China's economic activities and credit conditions in October were a result of the government's regulatory tightening and the “neutral and prudent” monetary policy with a tighter bias. China's 10 year yields jumped to a 3-year high, approaching 4%, while 5-year yields breached 4% the first time in over 3 years, on Tuesday. The surge in yields can be attributed to a confluence of factors, including a selloff of sovereign bonds after softer-than-expected macroeconomic data and a reflection of tightened liquidity in the financial system. However, we believe the most critical factor is the rallies in US yields, on expectations of a December rate hike, and UK yields, amidst BOE's rate hike earlier this month.
Inflation Headline CPI in China climbed +0.1 percentage point to +1.9% y/y in June, in line with expectations. On monthly basis, inflation contracted -0.1%, compared with consensus of a +0.1% increase. Yet, this is the smallest contraction since March this...
China's economic activities surprised to the upside in 1Q17. GDP expanded +6.9% y/y, beating consensus of, and 4Q16's, +6.8%. Growth was led by a +7.7% expansion in the tertiary sector, followed by a +6.4% growth in the secondary industry. Economic activities also strengthened across the board in March. Retail sales expanded +10.9%, accelerating from +9.5% in the combined January to February period. Industrial production (IP) growth improved to +7.6%, the fastest pace since end-2014, from +6.3% in the January-February period. The market had anticipated a mild drop to +6.2%. Fixed asset investment (FAI) increased 9.2% y/y to March, up from +8.9% in the January-February period. Looking into the details, investment gained +19.8% in the primary sector, +4.2% in the secondary sector and +12.2% y/y in the tertiary sector. Moreover, private investment expanded +7.7% y/y in March, up from +6.7% in the prior month, while the growth in public investment slowed to +13.6%, from +14.4% in February. For the first quarter of the year, retail sales grew +10%, IP rose +6.8% with manufacturing output up +7.4% while fixed asset investment expanded +9.2%, of which real estate investment and tech investment up +9.1% and +22.6%, respectively.
China's economic data beat expectations in February. Headline CPI improved to +29% y/y, beating expectations of +2.5%, from January's +1.5%. On the economic activity barometers, industrial production grew +7.2% y/y in February, exceeding expectations of +6.3% and January's +6.2%....
China’s major economic data in October all missed expectations and slowed from a month ago. Growth in industrial production decelerated to +4.7% y/y, from +5.8% in September. Retail sales growth weakened to 7.2% m/m, compared with +7.8% in September....
August data further evidenced that China's economic growth has peaked in the first quarter. Following the sharper-than-expected slowdown in growth in July, the latest set of macroeconomic data also surprised to the downside. The moderation was a result of the government's tighter monetary policy in an attempt to curb excessive investment in certain areas, such as real estate. Renminbi's appreciation against US dollar since the beginning of the year probably has weighed on exports. This leads the PBOC to loosen capital control which has been adopted over the past years to prevent renminbi from severe depreciation.
Chinese macroeconomic activities showed sharper than expected slowdown in July. Retails sales grew +10.4% y/y in July, down from +11% a month ago. The market had anticipated a milder moderation to +10.8%. Industrial production expanded +6.4% y/y in July, decelerating from +7.6% in the prior month. This came in weaker than consensus of +7.1%. Urban fixed asset investment expanded +8.3% in the first 7 months of the year, slowing from +8.6% in the first half of the year. The market had anticipated a steady growth of +8.6%. The slowdown in economic activities in China has been widely expected as the government pledged to deleverage in at attempted to defend and prevent systematic risks. However the abovementioned three major indicators came in even weaker than expectations. We expect Chinese economic growth to moderate in the second half of the year. Yet, the strength in the first half (GDP growth: +6.9%) signals that the government's full year target of 'around +6.5%' should be able to achieved.
The Caixin manufacturing PMI for China slipped to 50.8 in November, from 51 in October. The reading also missed expectations of 51. Looking into the details, production and new orders increased at modest rates, while purchasing costs rose sharply. However, confidence towards the business outlook dropped to joint-lowest on record. As the agency noted, the manufacturing sector remained stable for most of November, despite 'some signs of weakness'. It forecast that the economy would remain stable for 4Q17. While growth should improve this year, when compared with 2016, it should decelerate in 2018. By contrast, the official manufacturing PMI rose +0.2 point to 51.8 in November this also beat expectations of a drop to 51.5. Non- manufacturing PMI increased +0.5 point to 54.8 last month. Divergence between official and private PMIs is nothing new. Part of the reason for the divergence is that the official data focus on large enterprises, while Caixin's focus on SMEs. This interpretation appears contradicting this month. Indeed, the official report suggests that SME PMI improved, while that for large companies slipped -0.2 point to 52.9 in November.
China's official PMIs surprised to the downside in February. Manufacturing PMI dropped -1 point to 50.3 in February, while non-manufacturing PMI slipped -0.9 point to 54.4. The readings came in weaker than expectations of 52.1 and 55 respectively....
Two issues happened in China have roiled the market over the past two days. While the adjustment of renminbi fixing mechanism has resulted in a weaker currency, a news report citing an anonymous Chinese official as recommending to trim or halt purchases of US Treasuries has sent the longer-dated US Treasury (UST) yield higher, thus steepening the UST yield curve. While the former reveals that the Chinese government continues to actually intervene the FX market, putting its commitment to internationalize the currency in question, the latter is merely an act to maintain currency stability and a response as the US-China trade friction once again heats up.
Recent releases in China's November macroeconomic indicators suggest that growth continue to stabilize. Yet, weakness in renminbi means that capital outflow should remain a headache. China's growth in industrial production (IP) improved to +6.2% y/y in November, from +6.1% a month ago. This came in better than consensus of +6.1%. Retail sales expanded +10.8% y/y in November, compared with expectations of +10.2% and +10% in October. Indeed, this is the fastest pace of consumer spending growth so far this year. A key contributor to the upside surprise was auto sales, thanks to government tax incentives. Meanwhile, 'single's day earlier in November also helped boost sales of electronics and telecom products. Urban fixed assets investment gained +8.3% in the first 11 months of the year, unchanged from the year through October. This came in line with expectations.
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