China: Growth concern is back – Nordea Markets
Amy Yuan Zhuang, analyst at Nordea Markets, suggests that the market focus has turned on the health of Chinese economy with the trade war between the US and China becoming less a concern for the market.
“We remain skeptical about how many real changes a trade deal could bring. China will not adopt a fundamentally different industrial policy. That lays foundations for more confrontations with the US later.”
“Macro data from China does not provide much comfort for those worried about the economy. Growth momentum is weak. Export orders have fallen and it has negatively affected manufacturing activity. Furthermore, confidence is low among business leaders and consumers.”
“Even as we expect the GDP growth to decline this year, we think increased stimulus, monetary as well as fiscal, will provide a cushion for growth. Infrastructure projects will once again become the most important pillar. It might creates problems a few years down the line but short-term growth stability can be maintained.”