China Returning to Normal

Please see below the latest ‘Chart of the Week’ from State Street Global Markets

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This week, Ben Luk, senior multi asset strategist at State Street Global Markets, discusses the potential pickup in Chinese momentum despite one of the worst February macro releases since 1999.

“Earlier this month we saw the lowest manufacturing and services Purchasing Managers Index (PMI) in more than a decade. Whilst we expected it to serve as a preview on what to expect in the latest Chinese data, many market participants have turned to higher frequency data to gauge how China has improved in March, as major cities loosen their restrictions on factory resumption. For example, many have begun to track weekly iron ore imports from China, given the use of key raw materials to facilitate with the country’s infrastructure, as well as the use of investment to offset the slowdown across manufacturing and consumption caused by COVID-19. As you can see from the chart below, the results showed that iron ore imports were running nine percent below average in January, but collapsed to the lowest level ever in February. However, the good news is February is gone and the first two weeks of March indicate things are returning towards normal for China.”

 

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