Fra Danske Bank – læs hele analysen her
Chinese leading indicators have pointed to a peak in the cycle for some time (see Why China’s growth is strong now – and why it will slow down in 2017, 5 January). ‘
• After pointing to a peak in recent months, the April PMI confirmed that activity is slowing in Q2 and we expect this to continue for the rest of 2017 (see chart). • Why a slowdown?
Two main engines of recovery are turning lower. 1. The housing market is slowing. 2. The boost from infrastructure is fading. • Falling credit growth confirms that policy has been tightened since mid-2016. Slower growth is happening with the usual lag of nine months.
• We no longer look for a hike in official policy rates this year. • A peak in the China cycle would contribute to the reflation theme losing further steam, as the global cycle peaks and commodity price inflation heads lower.
Summary: Chinese cycle peaked in Q1 – heading lower Financial implications of slowdown – Less support for emerging market assets and global risk appetite – more support for bond markets.
– Still underlying downward pressure on the CNY.
– Fears of a hard landing may resurface in H2 and outflows may pick up.
– Support for commodity prices is fading.
