China Market falls after disappointing data

Mainland China share market finished session lower on Tuesday, 16 April 2024, with small-cap companies leading the decline, as March economic indicators signaled a wobbly recovery in the worlds second-largest economy. Geopolitical tensions in the Middle East kept risk appetite in check.

China's gross domestic product (GDP) grew 5.3% in January-March from the year earlier, slightly faster than the 5.2% expansion in the previous three months. However, a raft of March indicators released alongside the GDP data, including property investment, retail sales and industrial output, showed that demand at home remains weak and is retarding overall momentum.

At close of trade, the benchmark Shanghai Composite index retreated 1.65%, or 50.31 points, to 3,007.07. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 3.77%, or 64.24 points, to 1,638.44. The blue-chip CSI300 index dropped 1.07%, or 37.97 points, to 3,511.11.

ECONOMIC NEWS: China GDP Expands Annualized 5.3% In Q1- China's gross domestic product gained 5.3% on year in the first quarter of 2024, the National Bureau of Statistics said on Tuesday - exceeding expectations for an increase of 4.8% and up from 5.2% in the previous three months. On a seasonally adjusted quarterly basis, GDP was up 1.6% - accelerating from 1% in the three months prior. The bureau also said that industrial production rose 4.5% on year in March, shy of forecasts for a gain of 5.4% and down from 7% in February. Retail sales were up 3.1% in March, missing expectations for 5.1% and down from 5.5% in the previous month. Fixed asset investment improved an annual 4.5% in March, surpassing expectations for 4% and up from 4.2% a month earlier. House prices slipped 2.2% on year in March after sinking 1.4% in February. The jobless rate came in at 5.2%, in line with expectations and down from 5.3% in the previous month.

China's Retail Sales Growth Slows in March 2024- China's retail sales rose by 3.1% year-on-year in March 2024, marking the 14th consecutive month of increase but at a slower pace compared to the prior period's 5.5% rise. Sales growth eased for various categories including gold, silver, and jewelry, furniture, communications equipment, and oil products. Conversely, sales accelerated for grain and food oil, clothing, home appliances, and building materials. Personal care sales also rebounded, increasing by 3.5% after a previous decline. Office supplies and car sales, however, continued to decline.

China's Industrial Capacity Utilization Declines in Q1 2024- China's industrial capacity utilization rate fell to 73.6% in the first quarter of 2024, down from 74.3% in the same period a year earlier. This marks the lowest rate since Q1 2020, with decreases observed across all sectors including electricity, heat, gas, and water, mining, and manufacturing. The decline is part of a trend, as the industrial capacity utilization rate eased from 75.6% in 2022 to 75.1% in 2023.

China's Fixed-Asset Investment Rises in Q1 2024- China's fixed-asset investment increased by 4.5% year-on-year in January to March 2024, up from a 4.2% rise in the previous month. This marks the largest growth since April 2023, driven by accelerated investment in the secondary sector, particularly in the mining industry and electricity, heat, gas, and water. Investment in the primary sector also rebounded, while the tertiary sector continued to grow, albeit at a slower pace. However, investment in real estate contracted by 9.5% annually in the first quarter, compared to a 9.4% drop in the previous period.

China's Unemployment Rate Edges Down to 5.2% in March 2024- China's surveyed unemployment rate decreased to 5.2% in March 2024, down from 5.3% in the previous month. The jobless rate among locally registered residents was 5.3%, while non-local registered residents had a rate of 5.1%, with non-local agricultural registrants at 5.0%. In major cities, the urban unemployment rate was 5.1%. Employees in enterprises worked an average of 48.6 hours per week. By the end of the first quarter, the count of rural migrant workers increased by 2.2% year-on-year to 185.9 million. For January to March, the urban surveyed jobless rate averaged 5.2%, down by 0.3%age points from the same period last year.

CURRENCY NEWS: China's yuan declined to 5-month low against the dollar on Monday. Prior to the market's opening, the People's Bank of China set the midpoint rate at 7.1028 per U.S. dollar, weaker by 49 pips from previous day fixing.

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