China’s July data makes the country’s recovery less solid than expected. Exports weakness showed no sign of abating, down 23% YoY. After years of over 20% export growth, it looks as though 2009 will come in around 20% down since officials don’t see much of an export recovery until the end of the year.
Bloomberg: Domestic demand is unlikely “to provide a full remedy for the sharp contraction in external demand,” the commerce ministry said in a statement today.
New loans showed surprising weakness, worse than most economist’s estimates at less than 25% of their June level, though seasonal factors could be part of this. Industrial production and fixed asset investment also grew less than many had hoped.
Despite government support for “equity market stability” over the weekend, and the continued easy money it implies, the China’s CSI300 was down 4.5% last night, now entering what some might call a significant correction. Yuan forwards weakened alongside the market.
It’s clear that market participants are increasingly jittery.
“The slowdown in new lending is an excuse for investors to exit a market that’s risen too fast and gotten too expensive,” said Philippe Zhang, chief investment officer at AXA SPDB Investment Managers in Shanghai, which oversees about $220 million. Investors should sell China’s stocks as the market is in “bubble territory” and share prices already reflect expectations for a rebound in the economy and earnings, Shenyin & Wanguo Securities Co. said in a report yesterday.
Exports Growth – Down ~20% For a while Now
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