Growth outlook
All our three favourite leading indicators point to a moderate slowdown ahead .
- Home sales growth has declined.
- Commodity price inflation has weakened.
- The credit impulse continues to be weak.
Our export model is also lower due to a stronger CNY and a moderate decline in G3 PMI.
We are still looking for a moderate slowdown this year.
Financial implications
Equities: Weaker PMI points to less support for the global cycle and thus equities.
Emerging markets: Softer activity in China is normally a headwind for emerging market equities.
Global bonds: A weaker China cycle would lead to disinflationary pressures and put downward pressure on bond yields - all else being equal.
Commodities: Weaker Chinese construction is set to dampen commodity demand, especially
for industrial metals.
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