China Economic Scan - Your daily update on the Chinese economy.
In this edition: China says quick rebound in trade is unlikely, JP Morgan economist predicts housing price rally in China, Morgan Stanley raises Chinese stocks to 'neutral', Shanxi province plans coal futures exchange, Chinese stocks surge to 10-month high on Wednesday.
Top 5 headlines
China Says Quick Rebound in Trade Is Less Likely
- China said a quick rebound in trade is becoming less likely, with the nation’s exports and imports set to decline in the first half of this year.
- “China’s exports may start to grow as early as January after the major economies such as the U.S. and Japan gradually recover later this year,” said Xing Ziqiang, a Beijing-based economist at China International Capital Corp.
- Trade faces “unprecedented difficulties” and the outlook for the second half is not optimistic, Vice Commerce Minister Zhong Shan said in a statement about export credit insurance posted on the ministry’s Web site today. He didn’t elaborate on why a speedy recovery has become less likely.
Economist predicts housing price rally
- China's housing prices are predicted to rise by 5 to 10% this year and will keep a growth of 10% next year, Frank Gong, chief economist at JP Morgan, said.
- Hui Jianqiang, analyst of E-house China R&D Institute in Shanghai, echoed Gong's prediction as he said housing investment and sales are not in balance. "It is necessary for the government to adopt policies to lower the proportion of capital fund, in order to spur investment in real estate," Hui said.
- Urban residents have relatively high saving rates that will be sufficient to support consumption, Gong said. He added that the fast growing urban population indicates a huge domestic housing demand.
China Stocks Raised to ‘Neutral’ at Morgan Stanley
- China stocks were upgraded to “neutral” at Morgan Stanley, which said the growth in liquidity globally is boosting asset prices.
- The brokerage also increased its “base case” target for the MSCI China Index to 50.9 from 36.3, Morgan Stanley’s Hong Kong-based strategist Jerry Lou wrote in a note today. He had cut the rating on Chinese stocks to “cautious” in April.
- “A mini asset-economy upcycle, courtesy of aggressive policy-driven liquidity globally, could be developing,” Lou wrote. “Liquidity’s transference into borrowed prosperity could develop and carry the current market rally beyond 2009.”
Shanxi plans coal futures bourse
- Shanxi province, China's largest coal producer, said it has plans to establish the country's first coal and coke futures exchange to help stabilize the domestic market and secure a bigger voice in international pricing.
- "We have submitted a feasibility study to the authorities with the aim of establishing the market in 2012," said Wang Hua, director at the Shanxi provincial capital market development office.
- Shang Fulin, chairman of China Securities Regulatory Commission (CSRC), yesterday said at the sixth Shanghai Derivatives Market Forum that the CSRC would continue to encourage more futures products in China to help domestic enterprises hedge against financial risks.
China shares hit 10-month high, led by financials
- Chinese stocks surged again on Wednesday, the Shenzhen Component lead up +2.17% to 10,712, the Shanghai Composite rose +1.99% to 2,779, and the Hang Seng rose +1.02% to 18,576.
- Midsize lender Pudong Development Bank soared by the daily maximum of +10% to 28.73 yuan. Industrial & Commercial Bank of China, China's biggest commercial lender, soared +4.2% to 4.69 yuan. Bank of China gained +3.03% to 3.74 yuan.
- Property developers rose for a third day on hopes of a revival in China's real estate market. China Vanke, the country's biggest developer, advanced +6.1% to 10.84 yuan, while rival Poly Real Estate Group, surged +9% to 25.34 yuan.
Financial Indicators:
| Metric | Value | Point change | % change |
| Hang Seng Index | 18,576 | 187.39 | 1.02% |
| Shanghai Composite | 2,779 | 54.29 | 1.99% |
| Shenzhen Component | 10,712 | 227.98 | 2.17% |
| TAIEX | 6,893 | -55.94 | -0.80% |
| CNY/USD | 6.8306 | -0.0049 | -0.07% |
Source: China Economic Scan
