Next Week in China: 9-13 September 2024
Major Data Releases:
- 9 September: China to report August CPI
- 9 September: China to report August PPI
- 10 September: China to report August M2 supply rate
- 10 September: China to report August Aggregate Financing to the Real Economy (TSF
- 10 September: China to report August New RMB loans
- 14 September: China to report August Industrial Production Operation
- 14 September: China to report August Energy Production
- 14 September: China to report August Investment in Fixed Assets (excluding rural households)
- 14 September: China to report August Investment in Real Estate Development
- 14 September: China to report August Total Retail Sales of Consumer Goods
- 14 September: China to report August Commercial Housing Price Index
- 14 September: China to hold Press Conference on Economic Situation
Next week will be a significant week for data releases, with over 10 economic reports scheduled. In particular, the August consumer and producer price indices – which are key measures of inflation – as well as credit-related data, deserve extra attention.
We expect new loans in August to show a modest year-over-year increase, while Total Social Financing (TSF), a broad measure of liquidity in the Chinese economy, is likely to register a more significant year-over-year rise. Both household and corporate financing demand remain subdued, and this weak housing demand is exerting downward pressure on household loan issuance. Activity in the construction sector remains sluggish and demand for construction financing remains weak. However, the accelerated pace of government bond issuances in August is expected to provide substantial support to TSF growth for the month.
On inflation, we expect prices for food and travel-related services to rise across the board due to heavy rainfall and increased travel during the summer holiday season. As a result, we anticipate the August CPI post an approximate 0.8 per cent increase year-on-year. However, due to significant fluctuations in international commodity prices and a decline in domestic industrial product prices, we expect the PPI to decrease by 1.4 per cent from the previous year.
This week saw a mixed performance of China A-shares indices. As of Thursday, 5 September, the MSCI China Index had declined by 1.04 per cent, the Shanghai Composite Index had decreased by 0.81 per cent, the Shenzhen Component Index had risen by 0.95 per cent, and the ChiNext Index had increased by 1.81 per cent. The stock market has experienced structural changes since Thursday, wherein sectors that previously performed well, such as high-dividend sectors represented by banking stocks, have recently retreated. Sectors that previously performed well, such as high-dividend sectors represented by banking stocks, have recently retreated. Meanwhile, certain sectors that had been performing at lower levels have shown relative improvement. We now see funds that used to seek refuge in safe-haven sectors are beginning to dissipate. These placements are expected to continue flowing into previously oversold sectors, potentially driving a recovery in these areas.
This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.
