Standard Chartered analysts Hunter Chan and Shuang Ding anticipate that China's January-February hard economic data will demonstrate resilience, offsetting the impact of weak official Purchasing Managers' Index (PMI) readings. The official manufacturing PMI declined to a five-month low of 49 in February, down from 49.3 in January, with the Lunar New Year holiday cited as a contributing factor to the softness in sentiment indicators [1].
Despite the subdued PMI, Standard Chartered forecasts solid industrial production growth, estimating a year-on-year increase of 4.9% for January-February, supported by the production PMI averaging above 50 during the period [1]. Retail sales are expected to rebound, likely rising by 3.4% year-on-year, attributed to the holiday boost [1]. Trade growth is projected to remain robust, driven by lowered tariffs and steady global demand for AI-related materials and products [1].
Fixed asset investment (FAI) may have stabilized, as funding for infrastructure projects was likely replenished at the start of the year, although real estate investment is expected to continue contracting [1]. Inflation is anticipated to rise modestly, with M2 money supply growth staying elevated and credit momentum easing [1].
No specific market reactions or analyst opinions regarding forward-looking implications beyond these forecasts are provided in the article [1].
CONCLUSION
China's economic activity indicators are expected to show resilience despite weak sentiment reflected in official PMIs, with solid industrial production, rebounding retail sales, and robust trade growth. Fixed asset investment may stabilize, but real estate investment continues to contract. The overall market takeaway is cautiously optimistic, with modest inflation and easing credit momentum.