Financial Professionals

Market Insights

A A A

China October Economic Data Review

10/18/2011
Beginning with the October 1 release of the China PMI Manufacturing report, several economic reports from China have been released over the past few weeks. For the month of October, most of China’s economic numbers that matter have been reported, and the market’s focus now turns toward the October 31 release of China PMI.
 
Overall, the evidence suggests the Chinese economy is cooling – or “landing” as some like to say. The larger question is whether the cooling is attributed to an orchestrated effort on the part of the People’s Bank of China, or if the U.S. and European slowdown is impacting the Chinese economy.
 
Portfolio Strategy – Investors should not find anything within China’s October data that motivates them to aggressively assume more capital markets risk or to increase defensive positioning further toward cash. Rather, maintain current allocations with a watchful eye on the November data. I still expect that the end to the People’s Bank of China’s tightening cycle will allow for an increase in domestic demand and growth, which would be a favorable condition for the capital markets.
 
Let’s review the October data . . . .
 
October 1 – China PMI reports at 51.2, better than the previous month’s 50.9

Source: Bloomberg
                                                                                                                                                                  
October 12 – China exports year-on-year report at +17.1%, lower than previous month’s +24.5%

Source: Bloomberg
 
October 12 – China imports year-on-year report at +20.9%, lower than previous month’s +30.2%

Source: Bloomberg
 
October 13 – China CPI year-on-year reports at +6.1%, lower than previous month’s +6.2%

Source: Bloomberg
 
October 13 – China PPI year-on-year reports at +6.5%, lower than previous month’s +7.3%

Source: Bloomberg
 
October 17 – China GDP year-on-year reports at +9.1%, lower than previous quarter’s +9.5%

Source: Bloomberg
 
October 17 – China industrial production year-on-year reports at +13.8%, better than previous month’s +13.5%

Source: Bloomberg
 
October 17 – China retail sales year-on-year reports at +17.7%, better than previous month’s +17.0%

Source: Bloomberg

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.