16-01-2019

China’s PPI and CPI rose weaker-than-expected in December, raising fears of deflation in the market. Also, both China’s exports and imports had plunged into negative territory in December, highlighting the continued slowdown of the total domestic demand. Although China’s imports and exports in October and November didn’t drop sharply, December’s data clearly show that the local consumer demand has been decreasing. China’s exports will have a hard time picking up the momentum again amid the decelerating macro-economic growth and the on-going trade war. The world economy is still full of risk in the medium term.


China’s central bank has cut banks’ reserve requirement ratios (RRR) and carried out reverse repo operations in order to stimulate its slowing economy. The National Development and Reform Commission also announced that more resources would be channeled into infrastructure development projects. Infrastructure is anticipated to be the major stimulus for economic growth. It is expected to have a positive impact on construction-related sectors, including railway and infrastructure in the near term. The fact that the sector is relatively less affected by trade war makes it an attractive medium-long term investment for investors.

Reference:
Bloomberg
National Development and Reform Commission
National Bureau of Statistics

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