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16 Apr 2014
Asia EM Express: China's Q1 GDP growth slows down less than expected
FXStreet (Barcelona) - Two Chinese firms, which have provided loans to other companies, signaled on Tuesday that the debtors failed to make repayments at the designated time, spurring concerns of further defaults.
Shuntian Ship Building Co. announced that it hadn't received interest repayments on a 900 million yuan loan it had made to Nanjing Fudi Property Developing Co. Also Qiaqia Food Co Ltd hasn't been repayed the interest on the 40 million yuans it had lent to another food producer.
Still, the property market seems to be more at risk of a wave of defaults. Zhiwei Zhang, Research analyst from Nomura reminds about two other cases: “On 15 March, Hubei Yihua Co. disclosed that it had given Guizhou Anrui Property Developing Co. another six months on its RMB30m loan, while on 13 February, Bodao Co. announced it had given Huaian Hongkang Property Developing Co. another six months on its RMB50m loan.”
In the opinion of the expert these events are “further signs of stress building in China‟s property sector.” Zhang adds that the Nomura team “continue to believe that the property sector poses the primary risk to the economy in 2014 and 2015.”
Economic data
China's GDP data released on Wednesday revealed growth of 7.4% year-on-year in Q1, down from 7.7% in Q4 but slightly above forecasts of a 7.3% rise. On a quarterly basis GDP increased 1.4%, following 1.8% growth, in line with consensus.
China's annual Industrial Production data, also released on Wednesday by the National Bureau of Statistics, showed a 8.8% rise in February, up from +8.6% registered in January and below projections of a 9% increase.
Year-on-year Retail Sales edged up 12.2% in February, following 11.8% growth in January and slightly above forecasts of +12.1%.
On an annual basis Urban Investment (YTD) climbed 17.6%, down from the 17.9% increase and below expectations of a 18.1% rise.
According to Tim Condon, Head of Research-Asia at ING: “The 1Q14 GDP data and the higher-frequency March economic releases convey a sense of a stable economy. We cannot identify any macro issue pressing enough to distract the authorities from moving on the ambitious agenda of micro reforms identified in the Third Plenum. We consider this an investor-friendly state of affairs.”
Technicals
The Chinese yuan weakened on Wednesday against the dollar following the release of GDP data which pointed to a slowdown in China's economic activity. The USD/CNY rose by 0.03% to 6.2226.
The daily FXStreet Trend Index was slightly bullish, and the OB/OS Index overbought. RSI was at 67 at the last close and has dropped to 56 so far today. The Daily 2-StDev Volatility Bandwidth was shrinking at 91 pips, with ATR (14) shrinking at 110 pips. The 1D 200 SMA was at 6.1112, while the 1D 20 EMA was at 6.2006.
Shuntian Ship Building Co. announced that it hadn't received interest repayments on a 900 million yuan loan it had made to Nanjing Fudi Property Developing Co. Also Qiaqia Food Co Ltd hasn't been repayed the interest on the 40 million yuans it had lent to another food producer.
Still, the property market seems to be more at risk of a wave of defaults. Zhiwei Zhang, Research analyst from Nomura reminds about two other cases: “On 15 March, Hubei Yihua Co. disclosed that it had given Guizhou Anrui Property Developing Co. another six months on its RMB30m loan, while on 13 February, Bodao Co. announced it had given Huaian Hongkang Property Developing Co. another six months on its RMB50m loan.”
In the opinion of the expert these events are “further signs of stress building in China‟s property sector.” Zhang adds that the Nomura team “continue to believe that the property sector poses the primary risk to the economy in 2014 and 2015.”
Economic data
China's GDP data released on Wednesday revealed growth of 7.4% year-on-year in Q1, down from 7.7% in Q4 but slightly above forecasts of a 7.3% rise. On a quarterly basis GDP increased 1.4%, following 1.8% growth, in line with consensus.
China's annual Industrial Production data, also released on Wednesday by the National Bureau of Statistics, showed a 8.8% rise in February, up from +8.6% registered in January and below projections of a 9% increase.
Year-on-year Retail Sales edged up 12.2% in February, following 11.8% growth in January and slightly above forecasts of +12.1%.
On an annual basis Urban Investment (YTD) climbed 17.6%, down from the 17.9% increase and below expectations of a 18.1% rise.
According to Tim Condon, Head of Research-Asia at ING: “The 1Q14 GDP data and the higher-frequency March economic releases convey a sense of a stable economy. We cannot identify any macro issue pressing enough to distract the authorities from moving on the ambitious agenda of micro reforms identified in the Third Plenum. We consider this an investor-friendly state of affairs.”
Technicals
The Chinese yuan weakened on Wednesday against the dollar following the release of GDP data which pointed to a slowdown in China's economic activity. The USD/CNY rose by 0.03% to 6.2226.
The daily FXStreet Trend Index was slightly bullish, and the OB/OS Index overbought. RSI was at 67 at the last close and has dropped to 56 so far today. The Daily 2-StDev Volatility Bandwidth was shrinking at 91 pips, with ATR (14) shrinking at 110 pips. The 1D 200 SMA was at 6.1112, while the 1D 20 EMA was at 6.2006.