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China Economic Data

11/10/2011

Here on Long Island, the leaves on the trees have yet to fall, giving us a false sense of how close to the end of 2011 we really are. In fact, as an investor, if you are focusing more on opportunities in the remaining days of 2011, you might be misguided. Rather, it is time to begin strategizing about 2012’s opportunities. As an example, when reading this week’s economic figures from China, investors would be correct to view them as not enough to provide a near-term catalyst for global risk assets. However, there is enough to shift monetary policy.
 
When I script out my plan for 2012, China’s recent economic data emboldens my belief that for 2012 a shift in policy from the People’s Bank of China will act as a tailwind, versus the headwind of 2011. The efforts of Chinese policy makers to cool inflation by tightening monetary policy has worked. A soft landing has been achieved. Policy tightening is over, and potentially an easing phase could begin if needed in 2012.
 
This week’s economic data from China, all figures year on year:
 
•   CPI (Figure 1.1) fell to 5.5%, from 6.1% last month.
•   PPI (Figure 1.2) fell to 5.0%, from 6.5% last month.
•   Imports rose 28.7% versus 20.9% last month.
•   Exports rose 15.9% versus 17.1% last month.
•   Trade balance surplus is $17.03 billion versus $4.51 billion last month.
•   Industrial production rose 13.2% versus 13.8% last month.
•   Retail sales rose 17.2% versus last month’s 17.7%.
 
Figure 1.1  China CPI Year To Date

Source: Bloomberg
 
Figure 1.2  China PPI Year To Date

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.