There were some controversial Chinese trade figures that came out this weekend.
Exports all around the world grew more than expected. The gain of 9.9% was well ahead of the 5.5% that was expected.
But there was a question. Were they real?
Given all the fears about a hard China landing, any sign of a major pickup would be a major positive sign.
As Sam Ro noted earlier, BofAML economist Ting Lu came down on the side of thinking that the jump was all due to seasonal blips and the timing of holidays.
The question for us is to make sure whether the jump in export growth is a one-time blip due to some irregularities or it truly trends up. After reviewing all relevant factors, we remain cautious, though we think markets could relieve a bit that China’s exports could still hold up well when euro zone is in recession. In our view, the recent appreciation of euro-USD boosted yoy export growth by about 2%. And the fact that the mid-Autumn Festival was in the middle of Sep in 2011 but was part of the Golden Week in 2012 might also distort the data. In fact, the big rebound of export growth in Sep in Korea, Taiwan and China could all be affected by the different timing of mid-Autumn festival to some extent. Finally, base effect could play a big role as in 2011 export growth slumped to 17.0% yoy in Sep from 24.4% in Aug. Looking forward, demand of China’s major markets will likely remain work or even get weaker in yoy terms, while leading indicators like processing imports still point to low single digit export growth, so we conservatively expect export growth to moderate again (but remain positive) in coming months.
So far the market is agreeing that the jump in exports is nothing to get too excited about.
The Aussie Dollar — one of the purest avatars of sentiment on China — started off a bit higher, but is now down:
And within Aussie stocks, China-dependent materials companies are the big loser, according to Sky business reporter Brooke Corte.
For now, the market is cautious on these numbers.
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