Risk Assets Slightly Bullish, Despite the Crash in China - Forex News by FX Leaders
Will China's economy continues the freefall

Risk Assets Slightly Bullish, Despite the Crash in China

Posted Monday, May 16, 2022 by
Skerdian Meta • 1 min read

China’s economy is going from bad to worse. Lat month we saw a deep dive in manufacturing and service sectors due to the coronavirus lockdowns. In the first major lockdowns two years ago, manufacturing bounced pretty quickly but now it is diving deep, which means that it is affecting exports from china, with many ships stuck out of Chinese ports waiting for cargo. This will be another major problem in the global supply chain which will likely keep prices up as well.

Data from China April 2022

  • Retail sales YoY -11.1% vs -6.1% expected
  • Previous sales YoY were -3.5%
  • Industrial production YoY -2.9% vs +0.4% expected
  • Prior industrial production was +5.0%
  • Investment, fixed asset excluding rural YoY +6.8% vs 7.0% expected
  • Prior investment YoY were 9.3%
  • Urban jobless rate 6.1% vs 5.8% expected
  • Prior jobless rate was 6.0%

As you can see, retail sales and industrial output have both collapsed for March and are lower than even the lackluster expectations for April. Terrible numbers (they could be even worse given the doubts that tend to accompany official data from China).

Some analyst responses coming in:

  • these economic numbers are some of the worst ever reported

The China data is negative for AUD and other ‘risk’ assets.

Shanghai city official says:

  • Shanghai official says many restrictions to remain
  • 15 out of city’s 16 districts have reached zero-covid outside quarantined areas status
  • City’s epidemic is under control
  • However the risks of rebound remain and we need to continue to stick to controls
  • Focus until may 21 will be to prevent the risks of rebound, many movement restrictions to remain
  • Will look to allow normal life to resume in shanghai from June 1
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