In this briefing:
- FLASH: UK PMIs Pare Some Excess Pain in Feb-19
- China – Eurozone Negative Feedback Loop.
- Non-Performing Loans in China
- Trade Talks/Huawei/National People’s Congress/Deleveraging/Stocks
1. FLASH: UK PMIs Pare Some Excess Pain in Feb-19
- The pace of UK activity growth implied by the services PMI picked up amid a surprise rebound to 51.3. It remains gloomy relative to the official data, consistent with the survey’s bias to exaggerate uncertainty’s depressing effect.
- A slight slowing in comparable sectors is still likely, but I maintain my relatively bullish forecast for 1Q19 GDP growth of 0.3% q-o-q, albeit close to rounding down.
2. China – Eurozone Negative Feedback Loop.
Historically, Germany and China have depended on exports to lead growth. With the US unwilling to play the role of consumer of last resort and being determined to limit its current account deficit, this avenue is not available anymore. In the absence of a rethink by German policy makers as to how to make German growth more self -sustaining a deflationary feedback loop is developing between the EU and China.
3. Non-Performing Loans in China
We have all seen the think-pieces in western media talking about China’s economic slowdown. Much of content that western audiences understandably focus on is the effect the trade war has on the downturn. However, we ran across a piece of data entirely driven by China that gives us pause. The amount of non-performing loans has only continued to increase. Yet, according to a trusted source 2 trillion RMB has been shifted off of the books in China. This tells us that China cannot do enough to get rid of NPLs.
4. Trade Talks/Huawei/National People’s Congress/Deleveraging/Stocks
China News That Matters
- Getting closer… though Trump might just walk away
- The most beautiful phones in the world?
- Rubber stamps and reading between lines
- Mission accomplished for deleveraging?
- Sitting on a volcano
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
