China Growth Tracker: Re-Opening Index Stabilises

We published a note on how to track Chinese growth in real time using financial and commodity market prices. In these weekly reports, we update the indicators to help us track growth.

Summary

• Our high-frequency China reopening index appears to have found a solid base while our market data-based China growth tracker has further improved.
• In contrast, our economic data-based China growth tracker is down sharply through July.

PBOC Intervention and Further Poor Economic Data

Economic data continues to disappoint: industrial production, retail sales, and investment all proved weaker than consensus had expected. Meanwhile, the PBOC has cut the OMO by 10bps and MLF by 15bps. This has weighed pressure onto the currency, PBOC fixings and state bank intervention (around 7.28) preceded the further PBOC intervention.

While China pessimism is widespread, as reflected in our economic data-based China growth tracker which is down 22 points through July (June: -0.38; July: -0.60), our market data-based China growth tracker is soaring towards neutral. This is due to better year-on-year growth across iron ore, oil, the Baltic Dry Index, and China 10Y yields. Meanwhile, our high-frequency China reopening index continued to bumble around stable lows.

Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.

Ben Ford is Researcher at Macro Hive. Ben studied BSc Financial Mathematics at Cardiff University and MSc Finance at Cass Business School, his dissertations were on the tails of GARCH volatility models, and foreign exchange investment strategies during crises, respectively.

Photo Credit: depositphotos.com

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)