UBS: China's Weak Economic Data Shouldn't Worry Longer Term Investors

smiling chinese kids

Photo: Wootang01 | Flickr

Last week, China delivered an ugly PMI number, which ignited fears of a hard landing for the world’s second largest economy.However, the China economists at UBS aren’t losing any sleep over the number.

While they acknowledge weakness in the near term, they are more focused on the improvements they see in coming months, driven by a more favourable financial environment.

From their note to clients:

The latest PBC quarterly survey show that business confidence is improving, household expectations of inflation and future income are stable, and bankers have seen monetary policy been eased. Information in the survey is consistent with our view that economic activity IS weak now, but should rebound in the coming months, partly because the government HAS already eased policy to support growth. We expect new bank lending to return to “normal in March and Q2, and see limited impact on China from higher oil prices.

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