China: Activity slowdown and LPR hold – ING

ING’s Lynn Song expects China’s July data to show continued sluggish momentum, with only a modest rebound and weak Retail Sales at 1.7% year-on-year. Fixed Asset Investment is forecast to contract further, while Industrial Production remains relatively firm. Following the Politburo’s fiscal push, investment may recover in coming months, but Loan Prime Rates are expected to stay unchanged.

Sluggish data, steady loan prime rates

"China releases its key domestic activity data for July on Monday."

"We expect sluggish momentum to persist after the weak PMI readings earlier this month."

"We expect a modest rebound, but retail sales should remain weak at 1.7% year-on-year."

"Fixed asset investment is likely to slow further to -6.3% YoY ytd, while industrial production continues to outperform, moderating to 5.0% YoY."

"Following July’s Politburo meeting, which emphasised accelerating fiscal spending and the deployment of bond proceeds, investment activity could begin to recover in the coming months."

"On Thursday, China will announce its decision on loan prime rates."

"No change is expected, with the 1-year and 5-year rates remaining unchanged at 3.0% and 3.5%, respectively."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)