The overnight Retail Sales & Industrial Production came in below expected and this despite the big media focus on China's NPC & CPPCC 2014 annual session
By Bloomberg News
March 13 (Bloomberg) -- China's industrial-output, investment and retail-sales growth cooled more than estimated in January and February, signaling an economic slowdown that makes the government's 2014 expansion target harder to reach.
Factory production rose 8.6 percent in the two-month period from a year earlier, the National Bureau of Statistics said today in Beijing, compared with the 9.5 percent median projection of analysts surveyed by Bloomberg News. Retail sales advanced 11.8 percent, while fixed-asset investment excluding rural households increased 17.9 percent.
Premier Li Keqiang today said there's some flexibility around the nation's 7.5 percent growth goal this year and that the government's key concerns are jobs and livelihoods. Even so, the slowdown may add to chances of stimulus and test the Communist Party's commitment to give market forces a bigger role in the world's second-largest economy while clamping down on overcapacity, debt and pollution.
"The fairly dramatic slowdown is unusual in Chinese economic history of the last decade" and today's figures are "shockingly weak," Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong, said in a note.
"It points to a major deceleration of momentum in the beginning of 2014."
The below chart shows how even the weak PMI underestimates the weakness of the Chinese economy:
The data confirm our long standing view that China (& Asia) is in cyclical restructuring which will mean lower growth in both China and the world.
What's even more interesting is that President Li seems to accept the growth target of 7.5% will not be met: http://www.bloomberg.com/news/2014-03-13/china-s-growth-target-flexible-li-says.html
After today's number a number of my esteemed colleague is calling for 50 bps cut in RRR, however looking through "official China's" commentary I found this one:¨
+------------------------------------------------------------------------------+
BN 03/12 23:04 *TIME ISN'T RIPE FOR CHINA TO CUT RRR: SEC. JOURNAL COMMENTAR
+------------------------------------------------------------------------------+
Time Isn't Ripe for China to Cut RRR: Sec. Journal Commentary
2014-03-12 23:35:11.745 GMT
By Bloomberg News
March 13 (Bloomberg) -- Time isn't ripe to cut reserve requirement ratio because economy doesn't need large scale stimulus at the moment and yuan won't see depreciation trend, China Securities Journal says in front-page commentary today written by reporter Ren Xiao.
* PBOC has enough tools to boost economy and a RRR cut after a
period of pause will signal of change in policy direction,
which is unfavorable for expectation management, the
commentary says
* Link to commentary: http://tinyurl.com/kxyyyqb
Meanwhile USDCNY continues to edge higher… and market is looking for a doubling of the band relatively short to encourage two-days trading.
OVERALL:
The data confirms a strong trend towards disappointment on growth – this will eventually H2-2014 lead to dramatic slow-down in export orders from Europe (read: Germany) – I still see Q4 Germany flirting with negative growth rates as this dramatic and for many unexpected slow-down work itself through to the providers of cars, luxury good and investment capital.
It will also have deflationary implications as China now clearly is once again pursuing a mercantile strategy of regaining lost ground to JPY and KRW. Expect more fireworks on CNY than consensus.
Safe travels,
Steen
Med venlig hilsen | Best regards
Steen Jakobsen | Chief Investment Officer
Saxo Bank A/S | Philip Heymans Allé 15 | DK-2900 Hellerup
Phone: +45 39 77 40 00 | Direct: +45 39 77 62 23 | Mobile: +45 51 54 50 00
Research: http://www.tradingfloor.com/traders/steen-jakobsen
Please visit our website at www.saxobank.com
This email may contain confidential and/or privileged information.
If you are not the intended recipient (or have received this email
by mistake), please notify the sender immediately and destroy this
email. Any unauthorised copying, disclosure or distribution of the
material in this email is strictly prohibited.
Email transmission security and error-free status cannot be guaranteed
as information could be intercepted, corrupted, destroyed, delayed,
incomplete, or contain viruses. The sender therefore does not accept
liability for any errors or omissions in the contents of this message
which may arise as a result of email transmission.
Ingen kommentarer:
Send en kommentar