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20 Feb 2014
Flash: China HSBC PMI surprises on the downside - Nomura
FXStreet (Bali) - Zhiwei Zhang, Economist at Nomura, remains quite pessimistic on the prospects for Chinese growth this year, with his case reinforced by today's poor Chinese data.
Key Quotes
"The flash HSBC PMI dropped to 48.3 in February from 49.5 in January, lower than market and our expectations (Consensus 49.5, Nomura 49.0). New orders fell to 48.1 from 50.1and production to 49.2 from 50.8. New export orders rose to 49.3 from 48.4. We flagged the downside risk yesterday as the other leading indicator, the MNI business sentiment index also fell."
"We reiterate our view that the recovery in China is not sustainable and that GDP growth will slow to 7.5% y-o-y in Q1 and 7.1% in Q2, despite favourable base effects. Considering China's reported 2014 GDP growth target of 7.5%, we expect the government to loosen monetary policy in Q2 to support growth."
Key Quotes
"The flash HSBC PMI dropped to 48.3 in February from 49.5 in January, lower than market and our expectations (Consensus 49.5, Nomura 49.0). New orders fell to 48.1 from 50.1and production to 49.2 from 50.8. New export orders rose to 49.3 from 48.4. We flagged the downside risk yesterday as the other leading indicator, the MNI business sentiment index also fell."
"We reiterate our view that the recovery in China is not sustainable and that GDP growth will slow to 7.5% y-o-y in Q1 and 7.1% in Q2, despite favourable base effects. Considering China's reported 2014 GDP growth target of 7.5%, we expect the government to loosen monetary policy in Q2 to support growth."