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The war in Ukraine. Ageing populations. Rising temperatures. Investors are having to grapple with a formidable range of uncertainties around the long-term outlook for the global economy and markets. Their challenge is compounded by the fracturing of the …
22nd February 2023
With Hong Kong’s economy on the mend, the budget unveiled today curtailed some of last year’s emergency spending. But it still signals a supportive fiscal stance, particularly in areas hardest hit by COVID. Together with the reopening of Hong Kong’s …
Bank deposits held by Chinese households have soared over the past year. But that mostly reflects a shift out of riskier assets rather than a surge in savings. In fact, our calculations show that household wealth declined in 2022 for the first time in at …
20th February 2023
Buyer sentiment seems to be improving New home sales have taken a beating since their peak in early 2021. But there are some green shoots in the recent data which show sales in large cities rising at the start of this year. (See Chart 1.) We think this …
17th February 2023
The roots of the crisis in China’s property sector lie in the worsening long-term outlook for demand. This has not improved. But sales started the year so beaten down that a short-run cyclical recovery is likely. Sales of new residential property fell …
15th February 2023
Worse still to come for exporters China’s exports boomed throughout much of the pandemic with global consumers, stuck at home and flush with cash from fiscal transfers, spending more on Chinese-made goods. But the unwinding of those pandemic …
10th February 2023
Some of the moves in China’s financial markets that followed its rapid reopening – including a rise in equity prices, higher bond yields and stronger renminbi – have unwound in the past couple of weeks, but we think they will resume before too long. …
Credit growth is bottoming out After slowing last year, bank loan growth jumped to a 10-month high in January. After accounting for seasonal effects, broad credit growth looks to have ticked up too. We expect the recovery to continue in the near-term as …
Credit growth is bottoming out After slowing last year, bank loan growth jumped to a 10-month high in January. Broad credit growth looks to have ticked up too after accounting for seasonal effects. We expect the recovery to continue in the near-term as …
Inflation ticking up on reopening effects Factory-gate prices continued to decline last month thanks to falling commodity prices and waning supply chain disruption. But at the same time, a jump in demand for travel and other services following the removal …
2023 fiscal boost still on its way December’s Central Economic Work Conference called for stepped-up fiscal support this year. On-budget borrowing, a timely proxy for fiscal policy, has since picked up slightly. But officials still have work to do. Net …
3rd February 2023
Return of tourists will help drive the city’s recovery Hong Kong’s GDP was unchanged in q/q terms last quarter. This was largely due to a further decline in exports but the worst may be over on that front given that global growth is probably close to a …
1st February 2023
Industrial activity steady as services rebound The Caixin manufacturing PMI published today edged up slightly in January as disruption from the reopening wave eased but it remained at a subdued level. Taken together with the official survey published …
There is a touch of the Dr Jekyll and Mr Hyde about China’s climate credentials, with its well-documented record of burgeoning emissions and reliance on coal standing in stark contrast to its increasing influence over the supply of green technology. The …
31st January 2023
Reopening kick starts a rapid recovery The official PMIs add to evidence of a rapid rebound in economic activity this month as disruption from the reopening wave faded. More shoppers returned to the street boosting services activity while easing labour …
The Lunar New Year holiday wasn’t quite back to normal this year as fears of spreading COVID to elderly relatives prevented many households from returning to their hometowns – long-distance journeys, while the highest since the start of the pandemic, …
30th January 2023
Policy shifts pave the way for a cyclical recovery New home sales ended 2022 46% below their spring 2021 peak. But this could mark the bottom for China’s housing market. Daily data suggest that sales have rebounded strongly in recent weeks – they are …
27th January 2023
We held a Drop-In today to discuss the big economic and financial market development across Emerging Asia. (You can see an on-demand recording here .) This Update answers several of the questions that we received, some of which we couldn’t answer during …
26th January 2023
China’s statutory retirement ages for men and women are low. But raising them would not make a big difference to the size of the workforce since most workers today keep working once they have passed retirement age. Only a quarter of men drop out of the …
25th January 2023
The Year of the Rabbit that begins on Sunday will see a revival in outbound tourism from China that we expect to be stronger than recoveries seen elsewhere. China is reopening into a world that has already dismantled most virus controls. Its state-owned …
20th January 2023
A partial recovery in Lunar New Year travel The world’s largest annual migration of people is well underway, with millions of Chinese returning to their hometowns to spend the upcoming Lunar New Year holiday with their families. This migration, which …
The theme of global economic fracturing, which was the focus of our Spotlight Series of research last September, is at the centre of economic discussion in 2023, including at Davos. We held an online drop-in session yesterday to update clients on our …
19th January 2023
Our China Activity Proxy (CAP) suggests that output was still depressed at the end of 2022, though it held up surprisingly well in the face of a huge reopening wave of infections. With the virus situation now improving, activity appears on course for a …
A smaller-than-expected hit from reopening China’s statistics bureau claims that GDP was unchanged q/q in Q4. That is implausible, even accounting for December data showing surprising economic resilience in the face of the reopening wave of infections. …
17th January 2023
Tuesday’s retail sales data are likely to show that spending plunged as COVID crashed through China last month. But December was an age ago. It can’t tell us much about what will happen now. We’d caution against some of the bullish takes doing the rounds. …
13th January 2023
Reopening to boost imports but exports will still struggle China’s exports contracted year-on-year in December by the most since the Wuhan lockdown in early 2020. Imports held up slightly better but are still depressed. Inbound shipments should start to …
We had expected disruption from China’s reopening wave of COVID infections to weigh heavily on activity well into Q1. But there is mounting evidence that much of China’s population has already been infected and that disruption is already fading rapidly. …
12th January 2023
Some very modest reopening effects Consumer price inflation ticked up in December, while producer price deflation eased. There are some early signs that the transition toward living with COVID is starting to put upward pressure on prices. But the uptick …
Getting worse in December but soon likely to be getting better The downturn in credit growth extended in December amid the economic disruption from reopening. But the worst of the disruption may have already passed. The shift toward living with COVID and …
10th January 2023
Getting worse in December but soon likely to be getting better The downturn in credit growth extended in December amid the economic disruption from reopening. But the worst of disruption may have already passed. The shift toward living with COVID and …
The shift toward living with COVID will put some upward pressure on prices in China. But the uptick in inflation will not be as large as that seen in many other countries as they emerged from COVID controls over the past couple of years. While the initial …
9th January 2023
COVID-19 has torn through China’s population with remarkable speed. Medical experts estimate that over 70% of the population in major cities such as Shanghai have been infected since mid-November. Anecdotal evidence suggests that the human cost among the …
6th January 2023
Downward pressure on the Hong Kong dollar has abated in recent weeks and we think it is very unlikely that the existing currency framework will be abandoned any time soon. For much of 2022, the USD/HKD rate traded at the upper end of the band defined by …
It is three years since a cluster of cases of severe pneumonia started to draw attention in Wuhan. Chart 1 maps economic developments in China since then. The blue bars show cumulative growth since the end of 2019 and the black outlines show growth over …
4th January 2023
Headwinds from reopening continue into 2023 The latest surveys suggest that the reopening wave delivered another blow to the economy in December. Services activity looks to have slumped. Industry was not spared, although the hit appears more modest. But a …
3rd January 2023
Headwinds from reopening continue into 2023 The latest manufacturing surveys suggest that the hit to factory activity intensified further in December following the surge in infections. A combination of recurrent virus waves, a deepening global downturn …
The next couple of weeks will be crucial in China’s battle with COVID. It is possible, given reports of how widespread infections currently are, that the outbreak in Beijing is close to a peak (the official infection data are no longer reliable, so we …
23rd December 2022
Our China Activity Proxy (CAP) reveals the extent of the economic damage being done by the zero-COVID policy in its final weeks. Hopes that its ending would lead to a rapid recovery have been dashed though, as the rapid spread of infections has caused …
22nd December 2022
CEWC points to further policy support The Central Economic Work Conference (CEWC) ended today with a readout in state media promising further policy support for consumers and property developers in particular. China will “expand domestic demand” and …
16th December 2022
China’s authorities appear to have given up trying to manage the spread of COVID-19. If we’re right, the surge in infections underway in Beijing will spread rapidly across the country. As is happening now in the capital, many people will stay at home if …
15th December 2022
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. Our latest EM Outlook can be found here . EMs will experience one of the broadest slowdowns in GDP growth in 2023 since the 1990s. …
The downturn has deepened and reopening won’t reverse it overnight The disruption from virus outbreaks intensified in November, with retail sales, investment spending and industrial output all contracting by the most month-on-month since the Shanghai …
