China Market Update: June Trade & Credit Data Beat Expectations
Asian equities were mixed overnight, led higher by Thailand and the Philippines, as President Trump's tariff ire over the weekend was focused on the EU and Mexico.
Hong Kong grinded higher throughout the trading day. Stronger-than-expected export/import data provided a late-day boost, while Shanghai and Shenzhen bounced around the room to end slightly higher. Hong Kong saw large buying from Mainland China via Southbound Stock Connect. Internet stocks were largely higher, as Alibaba gained +0.95%, Tencent gained +0.68%, and Meituan gained +0.75%, though video platform Bilibili fell -0.35%, despite announcing 2025 gaming and advertising revenue growth targets of +20% and +15%.
Pharmaceuticals, biotech, auto, coal, non-ferrous metals, precious metals, and oil all had good sessions, while consumer services, such as hotels and restaurants, were off. The Mainland's pockets of strength were oil, banks, electricity, telecom, and precious metals. Meanwhile, semiconductors, software, healthcare equipment, and defense were all off.
Battery maker Contemporary Amperex Technology (CATL) fell -1.1% in Mainland trading, despite a deal with Australian miner BHP.
Solar manufacturer Tongwei gained +1.18% after announcing its first half net income loss would be in a range from RMB -3.9 billion to -5.2 billion, despite installed capacity growth due to 'the imbalance between supply and demand in the industry, which has not improved significantly, and the product prices of each link have been continuously depressed.' Peer LONGi Green Energy Technology fell -0.55% after announcing its first half net income loss will be between RMB -2.4 billion and RMB -2.8 billion.
Hopefully, overcapacity efforts kick into gear as investors look up China's government's new buzzword: anti-involutionary. Involution is when intense competition leads to diminished returns. Solar, steel, cement, autos, and E-Commerce are areas highlighted by the government to face 'anti-involutionary' measures. The effect could bring the end of China's deflationary effect on the global economy as well as its domestic economy. It could also lead to higher margins and profits for listed corporations. It is also very aligned with President Trump's China demands.
Export/import and credit data release was stronger than expected.
Chart1
Some additional metrics to consider include the following.
Chart2
The People's Bank of China (PBOC) held a press conference overnight. The release noted 'the effect of monetary policy supporting the real economy is relatively obvious', as social financing, new loans, and M2 data all beat expectations. Since 2020, the bank reserve requirement ratio has been cut twelve times, along with '9 policy rate reductions, lowering 1-year and 5-year LPR by 115 basis points and 130 basis points, respectively.' (The 5-Year Loan Prime Rate determines the mortgage rate). Lower interest rates have lowered the average corporate loan yields by 0.45% to 3.30% and new housing loan rates by 0.60% to 3.10%. Efforts will continue 'to implement moderate loose monetary policy… better promote the expansion of domestic demand…'. The release also stated that the market expects interest rate cuts in the second half of the year, as the 'misalignment of the monetary policy cycle between China and the United States will be improved', as spreads narrow.
It is funny that the PBOC and Trump both think Powell should cut US interest rates. GDP, new and second-hand home sales, retail sales, industrial production, and fixed asset investment will all be reported today.
On Friday, I stated that Hank Paulson's conversation with Vice Premier Ding Xuexiang received significant attention in China. I incorrectly stated that Paulson was a Democrat. Paulson was Secretary of the Treasury under George W. Bush. My bad! He did endorse Hillary Clinton in 2016, despite being a lifelong Republican.
New Content
Read our latest article:
KraneShares KOID ETF: Humanoid Robot Rings Nasdaq Opening Bell
Please click here to read
Chart3
Chart4
Chart5
Chart6
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New York Times
21 minutes ago
- New York Times
Rising Inflation Underscores Risks in Trump's New Tariff Threats
President Trump's steep tariffs have started to weigh on consumers' wallets, sending prices higher as the White House readies a more drastic — and potentially costly — expansion of its global trade war. The risks in Mr. Trump's economic strategy began to show on Tuesday, with the release of data that found inflation had accelerated in June. Prices rose noticeably on appliances, clothing and furniture, products that are all heavily exposed to the president's taxes on imports from Canada, China and other major trading partners. The inflation report undercut Mr. Trump's continued assertions that Americans would not face financial repercussions from his increasingly aggressive trade brinkmanship. Since taking office, the president has imposed withering duties on allies and adversaries alike, with additional taxes on a range of products such as cars and steel. The latest reading of the Consumer Price Index recorded the first signs of what economists had predicted all along, with U.S. businesses and consumers shouldering a growing share of the burden from the taxes Mr. Trump has imposed on imports. The data also carried perhaps a new warning for the president as he prepares another round of tariffs on dozens of countries in about two weeks, including a 30 percent tax on the European Union. Some experts said that an uptick in inflation could foreshadow more significant price increases later, especially if Mr. Trump proceeds as planned. 'Up until this report, you could have argued that inflation is on a journey lower,' said Padhraic Garvey, who leads ING's research team for the Americas. 'Now we are on a journey higher.' Want all of The Times? Subscribe.
CNN
32 minutes ago
- CNN
Q2 GDP: China posts better-than-expected 5.2% growth in the face of ongoing US trade war
Source: CNN China reported better-than-expected economic growth for the second quarter in the face of an ongoing trade war with the United States, as diversification efforts to non-US markets buoyed exports. Gross domestic product (GDP) expanded 5.2% in the second quarter from the same period a year earlier, according to the National Bureau of Statistics (NBS) at a press conference on Tuesday. That was higher than the average prediction of 5.1%, based on a poll of 40 economists surveyed by Reuters on Friday. The GDP growth in the second quarter was a slowdown from a 5.4% expansion in the first three months of the year. Together, GDP growth for the first half of the year compared to the same period last year stood at 5.3%, according to the NBS. Sheng Laiyun, deputy commissioner of the NBS, said the growth in the first half of the year was achieved 'under the challenging circumstances of rapidly shifting international dynamics and significantly increased external pressure since the second quarter.' 'We are also keenly aware that the external environment remains complex and volatile, internal structural problems have yet to be fundamentally resolved, and the foundation of economic performance still needs to be further strengthened,' he said. China's economy remains under mounting external and internal pressure to meet its ambitious target of 'around 5%' growth set for this year, a goal economists believe will be tough to achieve without further policy support. US President Donald Trump's tariff offensive – which at one point reached 145% on Chinese imports – has upended what is arguably the world's most consequential bilateral trade relationship. Under a May truce reached in Geneva that scaled back the triple-digit tariffs, Beijing has less than a month, until August 12, to secure a permanent deal with Washington. For China's export-reliant economy, much hinges on the tariff rate ultimately agreed upon. Even a double-digit levy would carry profound and lasting implications for Chinese manufacturers – a key pillar of the country's economic engine. Domestically, the Chinese economy continues to be plagued by a host of structural challenges, including a prolonged property crisis, soaring youth unemployment, sluggish consumption and persistent deflation. In June, consumer spending fell short of expectations while industrial production exceeded them, according to data released by the NBS Tuesday. Retail sales slowed to 4.8% from the same month last year, compared with 6.4% growth in May. Industrial output expanded 6.8% compared with June last year, an increase from 5.8% last month, likely due to the trade truce. Meanwhile, the housing market is slowing again, weighing on the economy after a brief recovery following late last year's stimulus, Macquarie Group's chief China economist Larry Hu wrote in a Wednesday research note. Investment in the sector plunged 11.2% in the first six months compared with the same period last year, according to NBS data. Nick Marro, principal economist for Asia at the Economist Intelligence Unit, told CNN that while the trade war has dragged on market sentiment, it hasn't emerged as the massive shock to Chinese economic performance that investors initially feared back in April. With weaknesses in the domestic economy, such as weak consumer confidence and persistent stress in the property sector, however, he expects China to barely undershoot its annual target for this year. But Marro also cautioned that there is a mismatch between what the GDP figure says and what companies and households are seeing on the ground. 'For many, this doesn't 'feel' like an economy growing at around 5% – That sentiment factor has implications for how sustainable future retail spending is, as well as considerations for businesses about future investment expansions, as well as hiring and wage growth,' he said. Despite growth in the first half of the year exceeding the 5% target, economists warned that existing obstacles could weigh on exports and slow economic momentum in the months ahead. Zichun Huang, an economist at Capital Economics, wrote in a Tuesday research note that the economic outlook for the rest of the year remains 'challenging.' 'With tariffs set to remain high, fiscal ammunition being depleted and structural headwinds persisting, growth is likely to slow further over the second half,' he said. In June, China's manufacturers capitalized on the trade truce with the US and diversified their supply routes to achieve a 5.8% growth in overall export compared to the same month in the previous year, beating analysts' forecast, according to trade data released on Monday by China's General Administration of Customs. At the same time, imports edged up 1.1%, marking the first monthly increase in inbound shipments since February. Notably, exports of rare earth jumped 32% in June from the same month a year ago, signaling positive progress as China agreed to approve the flow of the critical elements essential in everything from electronic products to vehicles and fighter jets following talks in London with the US last month. Outbound shipments to the US in June declined 16.1% from the same month last year due to persistent trade frictions. But exports last month grew 32% month-on-month following the Geneva agreement. For the first half of the year, exports to the US dropped 9.9% from a year earlier, with second-quarter shipments plummeting nearly 21%. Southeast Asia in particular has emerged as a major export destination in place of the US. Exports to the 10-country Association of Southeast Asian Nations (ASEAN) surged by over 18% compared with June last year. China has increasingly turned to neighboring economies not only as end markets but also as logistical intermediaries, routing goods through countries like Vietnam to circumvent US tariffs — a strategy the Trump Administration has vowed to crack down. As part of a trade framework the US reached with Vietnam, Trump said he will impose a 40% duty on transshipped imports via Vietnam. Chinese exports to Vietnam rose more than 25% last month compared with June last year. At a press conference on Thursday, Chinese officials touted how the country has diversified its 'circle of friends' with a rise in exports to the European Union, South Korea, Japan in addition to ASEAN in the first half of the year. Within China, the economy continues to grapple with deflationary pressure, as factory gate deflation, as measured by Producer Price Index (PPI), plunged 3.6% in June from a year earlier, according to NBS data released last week. This marks its sharpest decline in nearly two years, and extends the country's producer deflation streak to 33 consecutive months. Meanwhile, the Consumer Price Index (CPI), a benchmark for measuring inflation, rose 0.1% compared to the same month last year, ending a four-month decline. Deflation is problematic because it discourages people from spending now, in anticipation of lower prices in the future. This dampens consumption – a key driver of economic growth. Analysts attributed the uptick in consumer prices to government subsidies on consumer goods, and warned that the recovery may be short-lived as stimulus effects fade. The persistent deflationary pressure is squeezing business profits and wages, and it has been exacerbated by price wars and overcapacity such as in the auto industry. Authorities have grown increasingly concerned and have urged companies to end aggressive discounting. In response to the economic malaise and external challenges like tariffs, China's cabinet, the State Council on Wednesday unveiled a slew of measures to 'stabilize employment,' including expanding social insurance coverage, subsidies, loan support and vocational training for targeted groups such as youths. China's urban unemployment rate stood at 5% in June, below the government's annual target of 5.5%, according to the NBS on Tuesday. But youth unemployment remained a major problem. The unemployment rate for China's working population aged 16 to 24 remained elevated at 14.9% in May, despite falling to its lowest level in nearly a year. The figure for those aged 25 to 29 declined to 7% during the same period. As part of the new measures announced, the government will disburse a one-off subsidy of up to 1,500 yuan ($209) per person to companies and social organizations that hire unemployed youth aged 16 to 24 and pay for their full insurance for at least three months, the notice said. The State Council also directed local authorities to provide graduates struggling to find jobs with one-on-one support, including at least three job recommendations. After graduation, those still unemployed would receive continued support like policy briefings, career guidance, job leads, and training or internship opportunities, the notice said. See Full Web Article
The Verge
40 minutes ago
- The Verge
Analogue's 4K N64 has been delayed again, but only by a month
The Analogue 3D has been hit with another delay, but should still be launching this summer. In an update on its preorder website, Analogue explained that it's modern take on the Nintendo 64 'is now shipping in late August 2025,' after previously aiming for July. The company said in a separate statement that the decision was made due to the ever-changing situation around US tariffs. 'Following last week's sudden tariff changes, Analogue 3D will now begin shipping next month,' the company explained in a post on X. 'We're absorbing the costs — your preorder price stays the same. No additional charges. Late August, the wait ends: reviews go live with everything we've been saving for this moment.' Like its previous hardware, the $249.99 Analogue 3D is a modern console designed to play old games, in this case N64 cartridges. The new console can upscale classic games to 4K and includes multiple display modes to mimic the look and feel of a CRT display, and the company says that it supports 100 percent of N64 cartridges. It was originally planned for a launch in 2024, but has been hit with multiple delays since it was initially announced.
