Chinese Stocks Slide As Economic Slowdown Accelerates

Being the first data following The National Congress, we are expecting little in the way of disappointment from China's macro data. However, the slowdown in credit supply has been well telegraphed, and sure enough the data was not pretty with FAI growth at its weakest in 17 years, Retail Sales and Industrial Production both disappoint.

Early indicators for October industrial output aren't positive - the official PMI and export growth both edged down and came in below expectations, writes Bloomberg Economics economist Qian Wan:

"Environmental factors could also be at work - as winter is coming, factories in North China are facing more curbs to improve air quality."

And tonight's data confirmed that weakness:

Retail Sales YoY MISS +10.0% (+10.5% exp) against +10.3% in September - weakest since Feb 2006

Fixed Assets Investment YoY MEET +7.3% (+7.3% exp) against +7.5% in September - lowest since Feb 2000

Industrial Production YoY MISS +6.2% (+6.3% exp) against +6.6% in September

Not pretty:

Some standaouts:

In FAI, railway transportation investment fell by 58.6 percent.

Looking through the retail sales, cosmetics are doing well, as is food and furniture. Jewelry softened as did construction materials.

We are seeing a pretty pronounced slowdown in the property market, which indicates that industrial output may continue to step down in coming months.

See the difference here:

  • CHINA JAN.-JUNE NEW PROPERTY CONSTRUCTION RISES 10.6% Y/Y
  • CHINA JAN.-OCT. NEW PROPERTY CONSTRUCTION RISES 5.6% Y/Y

The lagged impact of China's credit impulse decline is starting to weigh on China macro data...

 

Chinese stocks are extending losses...

As Bloomberg notes, all eyes will be on China's bond market as this data lands today as yields spike to 3 year highs

Debt is proving itself increasingly sensitive to signs of bullishness in Chinese economic data, with the positive vibe melding with angst about the deleveraging campaign (which is starting to bite) to be a recipe for yield gains. Unsteadiness in the U.S. and U.K. bond markets doesn't help either.

Comments

Anteater Mon, 11/13/2017 - 21:16 Permalink

BT Cash is the only true store of value, and the Chinese. triadsconfirm this wisdom by setting BT Cash on a tear, why just then.....(excuse me, what?).... Yes folks, as I was just saying, the truestore of value is Enthuriasm, eaten with little tiny golden forksoff the mons Venus of a sainted Venezuelan nun turned stripper.

besnook Mon, 11/13/2017 - 21:38 Permalink

the usa would love to have 10% growth in retail sales yoy but it is dangerous for the usa if china "slows down" to 10%. that's the way a third world resource economy nation cries about.

MuffDiver69 Mon, 11/13/2017 - 22:03 Permalink

You have to chuckle at a country that admits industrial growth slows in its cold north region because the air will be to toxic to breathe if it’s manufacturing doesn’t scale back.....One heck of an economic model ...hahahaha...I get pictures of London in 1900 and I think London would be a better place to live then..

Let it Go Mon, 11/13/2017 - 22:34 Permalink

Anyone who can not see that China has blown up markets around the world with the shit they are pulling is blind. Money is printed there and continues to leak out and into other markets.It is difficult to ignore that China's central bank has warned extreme credit creation and trouble in the shadow banking system could lead to a full-blown financial crisis. In response, they continue pumping out liquidity. If they don't the whole system might seize up and cease to function, on the other hand, such actions only create more problems going forward. The article below looks at how China's policies are affecting global markets. http://China, China, China, It Is All About China html

ArmaG3don Tue, 11/14/2017 - 01:58 Permalink

Overlay Dow Chart with RMB. Markets were cooled down last time by Chinese. It's tripolar balance - China/Russia/US. China has most capital, US has most capital tech and Russia has the best defense system by all means. There is also Japan which is desperately struggling to overcome role of satellite. And there is also London which is Thug Capital. And there is Soros hoarding free labour for whatever reason he has.

ds Tue, 11/14/2017 - 22:00 Permalink

Just disclosing more reliable numbers positiioning their own People to accept slowdowns. No worries, employment will be provided to ensure no massive unrests. News of investment losses will be skewed towards target SOEs to create a mirage of equal sufferings. The target SOEs belong largely to the left wing of the Party that Xi is still culling. 

gdpetti Tue, 11/14/2017 - 11:35 Permalink

An analyst the other day mentioned that one of those 'ghost cities'  mentioned on this site over the last couple of years, is now mostly filled... as it was situated for access position to their OBOR initiative... to keep the economy going... and as the property market continues there, none of this is a problem. The real problem or issue to maintaining confidence in the system... as we all know the money is fake fiat, same everywhere, so how much can they issue without problems showing up elsewhere?THis slowdown has been expected, the real cycles of business, as nature, go up and down, not just up as we see in the Western financial markets... China is trying to allow reality to return to the markets before the Western markets collapse.