China Q12014 Macro Update - tracking key economic statistics

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China in Numbers Macro Update, 1Q14 Review March Data vs. Consensus Estimates Tertiary Industry Accounts for Nearly Half of GDP Most in Over 20 Years Investment Growth Declines, Trade Data Disappoints CPI Ticks Up, Money Supply Growth Slows Domestic stock markets decline in 1Q Key Data : NBS, NDRC, China Customs, Brokers, CapitalVue

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  • 1. CapitalVueResearchAnaly3cs MacroandIndustrialData ChinainNumbersMacroUpdate,1Q14Review MarchDatavs.ConsensusEs3mates Ter3aryIndustryAccountsforNearlyHalfofGDPMostinOver20Years InvestmentGrowthDeclines,TradeDataDisappoints CPITicksUp,MoneySupplyGrowthSlows Domes3cstockmarketsdeclinein1Q KeyData:NBS,NDRC,ChinaCustoms,Brokers,CapitalVue 1 Aselectsamplebroughttoyou byAnaly3cs@CapitalVue.com

2. ChinainNumbersMacroUpdate,August2013 ChinasJulymacrodatacameingenerally below CapitalVues consensus broker es3mates. Of 12 monthly indicators tracked,twoindicatorsbeatforecasts. GDP growth was basically in line with consensus es3mates, while export & importdatalargelydisappointed. Newloanswerehigherthanforecasts,but liquidity growth slowed on a monthly basis. 14-4-25 2Contact Us: Analytics@CapitalVue.com Indicator MarValue MarEs3mate FebValue Trend 1QGDP(%) 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 RetailSales(%) 12.2 12.28 / / FAI(%) 17.6 17.92 17.9 IndustrialOutput(%) 8.8 9.01 8.6 Exports(%) -6.6 3.12 -18.14 Imports(%) -11.3 3.86 10.4 TradeSurplus(US$Mn) 7,706 5,687 -22,989 NewLoans(RMBBn) 1045.5 987.4 644.5 M1(%) 5.3 5.8 6.9 M2(%) 12.1 12.7 13.3 3. GDPGrowthSlowsto7.4%in1Q14 Consump3oncontributed76.7%toGDPin1Q14,while investment and exports contributed 42.3% and -19%, respec3vely. It is worth no3ng that investment contribu3oninthelast5yearshasbeenthesmallestin 1Q. Tertiary industry accounted for nearly half of Chinas Economy in 1Q, the highest level since at least 1992. 314-4-25 ContactUs:Analy.cs@CapitalVue.com 4. HaitongSecuri3es1Q14GDPgrowthisar3ciallyhigh,withscalrevenuegrowthofonly5.2%inMarch,anew lowsinceAugust2012,indirectlyprovingthateconomyissharplydecelera3ng.Decreaseddomes3cdemandisthe reasonforslowereconomicgrowthin1Q,whileconsump3onandinvestmentgrowthslow,inuencedbyaweak realestatemarket.Realestatesalesvolumeistypicallyasix-monthleadingindicatorofeconomictrends,meaning economicgrowthislikelytocon3nueslowing. CITICSecuri3es1Qxedassetinvestmentrecordednominalgrowthof17.6%y/y,con3nuingtoslow,duetoa declineinrealestateinvestment.Wethinktherealestatedeclineisexpectedandthesharpdecreaseinsales volumewillbringlowerinvestmentinthefuture.Meanwhile,arallyininfrastructureinvestmentwillactasa hedgeforthedeclineinrealestateinvestment. HuarongSecuri3esSlower1Qeconomicisinlinewithexpecta3ons.Themainreasonsfortheslowergrowthare weakdemandcoupledwithasharpdeclineinexportsandimports.Strengthenedregula3onofshadowbanking, contrac3ngovercapacity,environmentalpollu3onandsafetyalsohadanimpactoneconomicgrowth.Steady growthpolicywillpayoin2Q,withtheeconomyexpectedtostabilize. Fiscalexpenditurein1Qwasthreetrillionyuanandincreasearound9%y/yin2014.Nevertheless,manyscal expenditureitemsarexed,suchaseduca3on,medicalcare,socialsecurityandurbanaairs.Thismeansthat increasingscalexpendituretostabilizegrowthwillonlybefunc3onalifthereisalargeamountofprivatecapital investment. 14-4-25 Analy3cs@CapitalVue.com 4 Brokerson1QEconomy 5. Total social nancing declined 9% y/y to RMB 5.6 trillion in 1Q14, compared to the 59% y/y increase in 1Q13. The propor3onofloansinnewcreditdroppedto66.4%inMarch, thelowestlevelsinceJanuaryof2013. GrowthinNewCreditandMoneySupplySlow Growthinmoneysupplycon3nuestodecline,withM2 growth slowing to 12.1% in March, compared to the 13.3%growthinFebruary 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. 514-4-25 ContactUs:Analy.cs@CapitalVue.com 6. Investment,Consump3on,Trade,PropertyData 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. 614-4-25 ContactUs:Analy.cs@CapitalVue.com Realestateinvestmentgrowthdeclinedto16.3%y/yin March,thelowestlevelsinceMayof2009.Residen3al housingconstruc3onstartsandtransac3onvaluealso largelydeclinedintherstquarterof2014. Fixedassetinvestmentgrowthhitslowestlevelinover adecade. 7. MarchCPIgrowthof2.4%wasupslightlym/m, while the central bank con3nues to 3ghten liquidity. CPIUpSlightly,PMIRisesto50.3 ChinasocialPMIroseto50.3inMarch,up0.1 pointfromFebruary.Thenewexportordersub index increased to 50.1, recovering above the expansionarythresholdfrom48.2inFebruary. 714-4-25 ContactUs:Analy.cs@CapitalVue.com 8. CapitalMarketsandExchangeRates ChinasstockmarketsdeclinedinthemonthofMarch, withtheSCIdown3.91%in1Q.TheSZSEComponent Index declined 11.49% in the rst quarter, while the ChiNext Index, represen3ng growth stocks, gained 3.63%overthesameperiod. 814-4-25 Contact Us: Analytics@CapitalVue.com TheRMBendeditsapprecia3ontrend,deprecia3ng90bpin 1Q14.TheRMBhasbeensteadilydeprecia3ngagainstthe USDaperthecentralparityratehitahighof6.09onJan 14. 9. MacroForecasts:link GDPGrowth:link Consump3oncontribu3ontogrowth:link Investmentcontribu3on:link Exportcontribu3on:link Socialnancing:link Loangrowth:link M2growth:link CPI:link PPI:link Clicktoaccesstherelateddataseries(Clientsonly) Newresiden3alconstruc3onstarts:link Realestatexedassetinvestment:link Homesalesvalue:link Electricityuse:link Railfreight:link Steelproduc3on:link CSI300Index:link USD/RMB:link PBoCopenmarketopera3ons:link 914-4-25 Contact Us: Analytics@CapitalVue.com PMI:link PMI:NewOrders:link PMI:ExportOrders:link Non-manufacturingPMI:link Imports:link Exports:link TradeBalance:link Fixedassetinvestment:link Retailsales:link Industrialoutput:link AboutCapitalVue CapitalVueprovidesGreaterChinacapitalmarket,fundamental, and3me-seriessta3s3caldatabasesforhedgefunds,investment banks,corpora3ons,specialtyadvisorsandotherglobal ins3tu3ons,throughanintegratedcloudterminalandmobile tabletdevice. Formoreinforma3on: Analy3cs@CapitalVue.com www.capitalvue.com Disclaimer: This report sets out informa.on by CapitalVue Ltd. collected from a variety of sources and should in no way be construed as investment, nancial,legalorotheradvice.Theinforma.onandopinionscontainedhereinareforreferenceonly,andarenotarecommenda.on,oer,orsolicita.onto buyorsellanysecuri.eswhatsoever.CapitalVuehastakenallduecaretoensuretheaccuracyoftheinforma.onprovidedinthisreport,butcannot guaranteethevalidityoraccuracyofallsourcesofinforma.on.CapitalVueisnotaregisteredinvestmentadvisororbrokerdealer.Copyrightofthisreport belongstoCapitalVue.Anyunauthorizeddistribu.on,reproduc.on,publica.on,orquoteisprohibitedwithoutCapitalVue'sexpresswriJenpermission.

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