PRESSEMITTEILUNGEN
Tariff war continues to affect China’s equity markets
Sunday 14th July '19
Chinese stocks posted a loss last week as trade data underscored the impact of the tariff war. Export growth in June slowed 1.3% versus the prior year while imports fell more than expected by 7.3% over the prior year. The weak import data provided evidence of weaker domestic demand. June imports from the US dipped by 31.4% versus last year while US bound exports fell 7.8%. The latest trade data was a reflection of the latest tariff hike on US$200bn worth of Chinese good to 25% from 10% on May 10 due to the breakdown of trade talks in May.
The latest tweet by President Trump that China is “letting us down” by not increasing its purchases of American farm products as previously agreed by the two nations, provides further signs that little progress has been achieved since the G-20 meeting and the potential for further escalation remain high. Chinese producer prices over the year to June which were lower than expected and led to concerns about deflation. Meanwhile consumer prices rose by 2.7% over the prior year to June as a spike in food prices continues to drive consumer price growth trend higher. Milder reaction across Chinese equity and bond markets suggest investors continue to expect more stimulus by the Chinese government. Chinese GDP came in at 6.2% marking its lowest level since 1992. We believe this is in line with the government’s range bound target of 6- 6.5% outlined at the start of 2019 and were largely in line with estimates.