Arnaud Masset
Swissquote Bank Ltd
The publication of the last batch of Chinese hard data painted a better-than-expected picture of the country’s economic situation. Investors have increasingly worried that slowing growth in the world second largest economy would have a significant global impact. In addition, the trade war unleashed by Donald Trump more than a year was expected to worsen the situation. However, after a rough start into the year, data seems to suggest that the worse over. Retail sales accelerated to 8.7%y/y in March versus forecast of 8.4% and 8.2% in December (no data in January and February due to New Year holidays). Industrial production surprised the most as it jumped 8.5%y/y last month, while market participants expected an increase of 5.9%. Globally, the economic activity stabilised somewhat in the first quarter as GDP growth printed at 6.4%y/y, beating estimates of 6.3%.
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Overall, we do not believe that those impressive figures indicate that the Chinese economy is out of the wood. At best, it suggests a slower pace of deceleration. The lack of reaction in both the FX and the equity market indicate that it is not much to celebrate: the yuan barely appreciated against the greenback woth USD/CNY sliding 0.30% to 6.69, while the CSI 300 edged up by 0.04%. On the other hand, it can be seen as a hard blow to the US administration that has been calming for months that the trade war hurting China badly. We do not believe those data are game changer but it could definitely put US negotiators in a weaker position.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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