Many Financial Institutions Pessimistic Over Chinese Economy in 2013-Shanghai Metals Market

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Many Financial Institutions Pessimistic Over Chinese Economy in 2013

SMM Insight 08:47:41AM Jun 19, 2013 Source:SMM

SHANGHAI, Jun. 19 (SMM) – Economic data over the past few months suggest slowdown in the Chinese economy. The World Bank, International Monetary Fund (IMF) and other financial institutions all cut forecast for China’s economic growth.

It was reported that many institutions expect China’s GDP in 2013 to grow 7.8% while others predict that China’s GDP growth will slip below 7% in 3Q and 4Q.

GDP Growth Slows
China registered a 7.7% growth in its GDP in 1Q, lower than the 8% forecasted. BNP Paribas Securities, Barclays and other institutions project slowing growth in China’s economy in 2Q, with Barclays forecasting a 7.5% growth in the Chinese economy in 2Q. 

Institutions hold divergent views over China’s economic growth in 3Q and 4Q. Deutsche Bank believes the Chinese economy will turn better in 2H compared with 1H, projecting an 8% rise in China’s GDP in 4Q, and 7.9% growth in 2013. Nomura Securities, in contrast, is pessimistic over the Chinese economy. The company stated in its report on June 16 that the Chinese economy will grow 7.4% and 7.2%, respectively in 3Q and 4Q,

It is widely believed among financial institutions that China’s GDP will grow 7.8% during 2013, with JPMorgan expecting a 7.8% growth, HSBC forecasting an 8.2% rise, United Bank of Switzerland and Nomura Securities anticipating a 7.5% increase.

Factors behind Economic Slowdown
Although institutions split over their forecasts over the Chinese economic growth, they do agree that economic growth in 2H is closely associated with liquidity and monetary policy.

Ma Jun, Chief Economist of Deutsche Bank, understands that the Chinese economy will show signs of recovery in 2H this year and 1H next year. Mr Ma believes loose credit market, slowing RMB appreciation and stable real estate policy will lead to a rebound in investment and improvement in export demand. He projects that the Chinese GDP will grow slightly over 8% in 4Q.  

Chen Xingdong, Managing Director of BNP Paribas Securities and Chief Economist, notes that China’s economic growth in 3Q and 4Q will depend on what scale of stimulus policies the central government will introduce. He understands that it will be difficult for China to achieve the 7.5% growth target for the full year of 2013.  

Nomura Securities holds the view that China’s monetary policy will remain relatively tight in 2H.

China’s social financing totaled RMB 1.2 trillion in May, RMB 500 billion off April’s RMB 1.7 trillion and nearly halved from March’s RMB 2.5 trillion.

Nomura Securities attributes the sharp decline in social financing to regulatory authorities’ crackdown on Shadow Banking system.

In addition to tight liquidity in China’s domestic market, Nomura Securities believes emerging markets also pose risks to Chinese economy. With China becoming increasingly reliant on exports to emerging markets, downward economic risks in these emerging countries will drag the Chinese economy down. (Edited by SMM)  
 

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Many Financial Institutions Pessimistic Over Chinese Economy in 2013

SMM Insight 08:47:41AM Jun 19, 2013 Source:SMM

SHANGHAI, Jun. 19 (SMM) – Economic data over the past few months suggest slowdown in the Chinese economy. The World Bank, International Monetary Fund (IMF) and other financial institutions all cut forecast for China’s economic growth.

It was reported that many institutions expect China’s GDP in 2013 to grow 7.8% while others predict that China’s GDP growth will slip below 7% in 3Q and 4Q.

GDP Growth Slows
China registered a 7.7% growth in its GDP in 1Q, lower than the 8% forecasted. BNP Paribas Securities, Barclays and other institutions project slowing growth in China’s economy in 2Q, with Barclays forecasting a 7.5% growth in the Chinese economy in 2Q. 

Institutions hold divergent views over China’s economic growth in 3Q and 4Q. Deutsche Bank believes the Chinese economy will turn better in 2H compared with 1H, projecting an 8% rise in China’s GDP in 4Q, and 7.9% growth in 2013. Nomura Securities, in contrast, is pessimistic over the Chinese economy. The company stated in its report on June 16 that the Chinese economy will grow 7.4% and 7.2%, respectively in 3Q and 4Q,

It is widely believed among financial institutions that China’s GDP will grow 7.8% during 2013, with JPMorgan expecting a 7.8% growth, HSBC forecasting an 8.2% rise, United Bank of Switzerland and Nomura Securities anticipating a 7.5% increase.

Factors behind Economic Slowdown
Although institutions split over their forecasts over the Chinese economic growth, they do agree that economic growth in 2H is closely associated with liquidity and monetary policy.

Ma Jun, Chief Economist of Deutsche Bank, understands that the Chinese economy will show signs of recovery in 2H this year and 1H next year. Mr Ma believes loose credit market, slowing RMB appreciation and stable real estate policy will lead to a rebound in investment and improvement in export demand. He projects that the Chinese GDP will grow slightly over 8% in 4Q.  

Chen Xingdong, Managing Director of BNP Paribas Securities and Chief Economist, notes that China’s economic growth in 3Q and 4Q will depend on what scale of stimulus policies the central government will introduce. He understands that it will be difficult for China to achieve the 7.5% growth target for the full year of 2013.  

Nomura Securities holds the view that China’s monetary policy will remain relatively tight in 2H.

China’s social financing totaled RMB 1.2 trillion in May, RMB 500 billion off April’s RMB 1.7 trillion and nearly halved from March’s RMB 2.5 trillion.

Nomura Securities attributes the sharp decline in social financing to regulatory authorities’ crackdown on Shadow Banking system.

In addition to tight liquidity in China’s domestic market, Nomura Securities believes emerging markets also pose risks to Chinese economy. With China becoming increasingly reliant on exports to emerging markets, downward economic risks in these emerging countries will drag the Chinese economy down. (Edited by SMM)