A surprising chart here from Morgan Stanley, which somewhat flies in the face of the idea that Chinese demand for industrial commodities is collapsing.
Photo: Morgan Stanley
Total copper product imports improved 4% YoY and 11% mum and are up 5% YTD, in line with our expectations of copper consumption growth in China this year. We attribute this result to the emerging pockets of strength for copper use in China, namely in power infrastructure, white goods restocking and auto production.
The fact of the matter is that there’s strength across a range of metals commodities, as iron ore prices pick back up as well.
In the last few days there’s been a slight shift in how people are looking at China. It’s perhaps not the basket case people thought it was just two weeks ago.
The latest trade data has helped enforce this view.
Here’s Nomura weighing the balance of recent data:
In a note put out this week, SocGen’s Sebastien Galy dropped this observation after meeting with clients:
I have investors mentioning long SHComposite vs G10 equity indices, which is incidentally one of the trades of the cross asset group. The dividend yield and other metrics are actually more appealing it seems, while bearish sentiment towards China had reached a peak.
Something to watch.