CapitalVue Research Analy3cs Macro and Industrial Data
China in Numbers – Macro Update, 1Q14 Review
ü March Data vs. Consensus Es3mates ü Ter3ary Industry Accounts for Nearly Half of GDP ‒ Most in Over 20 Years ü Investment Growth Declines, Trade Data Disappoints ü CPI Ticks Up, Money Supply Growth Slows ü Domes3c stock markets decline in 1Q
Key Data : NBS, NDRC, China Customs, Brokers, CapitalVue
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China in Numbers – Macro Update, August 2013
China’s July macro data came in generally below CapitalVue’s consensus broker es3mates. Of 12 monthly indicators tracked, two indicators beat forecasts. GDP growth was basically in line with consensus es3mates, while export & import data largely disappointed. New loans were higher than forecasts, but liquidity growth slowed on a monthly basis.
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Indicator Mar Value Mar Es3mate Feb Value Trend 1Q GDP (%) 7.4 7.4 7.8 (4Q) ↓
CPI(%) 2.4 2.47 2.0 ↑
PPI(%) -‐2.3 -‐2.15 -‐2.0 ↓
PMI(%) 50.3 / 50.2 ↑
Retail Sales (%) 12.2 12.28 / /
FAI (%) 17.6 17.92 17.9 ↓
Industrial Output (%) 8.8 9.01 8.6 ↑
Exports (%) -‐6.6 3.12 -‐18.14 ↓
Imports (%) -‐11.3 3.86 10.4 ↓
Trade Surplus (US$Mn) 7,706 5,687 -‐22,989 ↑
New Loans (RMB Bn) 1045.5 987.4 644.5 ↑
M1 (%) 5.3 5.8 6.9 ↓
M2 (%) 12.1 12.7 13.3 ↓
GDP Growth Slows to 7.4% in 1Q14
Consump3on contributed 76.7% to GDP in 1Q14, while investment and exports contributed 42.3% and -‐19%, respec3vely. It is worth no3ng that investment contribu3on in the last 5 years has been the smallest in 1Q.
Tertiary industry accounted for nearly half of China’s Economy in 1Q, the highest level since at least 1992.
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• Haitong Securi3es— 1Q14 GDP growth is ar3ficially high, with fiscal revenue growth of only 5.2% in March, a new low since August 2012, indirectly proving that economy is sharply decelera3ng. Decreased domes3c demand is the reason for slower economic growth in 1Q, while consump3on and investment growth slow, influenced by a weak real estate market. Real estate sales volume is typically a six-‐month leading indicator of economic trends, meaning economic growth is likely to con3nue slowing.
• CITIC Securi3es—1Q fixed asset investment recorded nominal growth of 17.6% y/y, con3nuing to slow, due to a decline in real estate investment. We think the real estate decline is expected and the sharp decrease in sales volume will bring lower investment in the future. Meanwhile, a rally in infrastructure investment will act as a hedge for the decline in real estate investment.
• Huarong Securi3es—Slower 1Q economic is in line with expecta3ons. The main reasons for the slower growth are weak demand coupled with a sharp decline in exports and imports. Strengthened regula3on of shadow banking, contrac3ng overcapacity, environmental pollu3on and safety also had an impact on economic growth. Steady growth policy will pay off in 2Q, with the economy expected to stabilize.
• Fiscal expenditure in 1Q was three trillion yuan and increase around 9% y/y in 2014. Nevertheless, many fiscal expenditure items are fixed, such as educa3on, medical care, social security and urban affairs. This means that increasing fiscal expenditure to stabilize growth will only be func3onal if there is a large amount of private capital investment. �
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Brokers on 1Q Economy
Total social financing declined 9% y/y to RMB 5.6 trillion in 1Q14, compared to the 59% y/y increase in 1Q13. The propor3on of loans in new credit dropped to 66.4% in March, the lowest level since January of 2013.
Growth in New Credit and Money Supply Slow
Growth in money supply con3nues to decline, with M2 growth slowing to 12.1% in March, compared to the 13.3% growth in February
Credit growth spike in Sep `12 pulls up 4Q12 GDP, but overall negative credit growth in 1Q14 drags GDP growth to the lowest level since the second quarter of 1998.
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Investment, Consump3on, Trade, Property Data
Imports plunged in March, falling 11.29% m/m, while export growth declined 6.63% m/m, improving from the 18.14% m/m decline in February. Analysts expect weak trade data to continue, with tighter regulation on trade activity.
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Real estate investment growth declined to 16.3% y/y in March, the lowest level since May of 2009. Residen3al housing construc3on starts and transac3on value also largely declined in the first quarter of 2014. �
Fixed asset investment growth hits lowest level in over a decade.�
March CPI growth of 2.4% was up slightly m/m, while the central bank con3nues to 3ghten liquidity.
CPI Up Slightly, PMI Rises to 50.3
China’s official PMI rose to 50.3 in March, up 0.1 point from February. The new export order sub index increased to 50.1, recovering above the expansionary threshold from 48.2 in February.
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Capital Markets and Exchange Rates
China’s stock markets declined in the month of March, with the SCI down 3.91% in 1Q. The SZSE Component Index declined 11.49% in the first quarter, while the ChiNext Index, represen3ng growth stocks, gained 3.63% over the same period.
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The RMB ended its apprecia3on trend, deprecia3ng 90bp in 1Q14. The RMB has been steadily deprecia3ng against the USD aper the central parity rate hit a high of 6.09 on Jan 14.
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Macro Forecasts: link GDP Growth: link Consump3on contribu3on to growth: link Investment contribu3on: link Export contribu3on: link Social financing: link Loan growth: link M2 growth: link CPI: link PPI: link
Click to access the related data series (Clients only)
New residen3al construc3on starts: link Real estate fixed asset investment: link Home sales value: link Electricity use: link Rail freight: link Steel produc3on: link CSI 300 Index: link USD/RMB: link PBoC open market opera3ons: link
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PMI: link PMI: New Orders: link PMI: Export Orders: link Non-‐manufacturing PMI: link Imports: link Exports: link Trade Balance: link Fixed asset investment: link Retail sales: link Industrial output: link
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