(MENAFN– Media OutReach Newswire)
Chinese markets are improving as the economy shows signs of recovery. Despite some positive data, challenges remain. Octa Broker analyzes the impacts of the People’s Bank of China’s upcoming interest rate decision.
KUALA LUMPUR, MALAYSIA –
Media OutReach Newswire – 19 October 2024 – Recent economic data from China has been encouraging, though risks persist. The market’s initial response has been positive, which is good news for Asian economies, but the trend’s sustainability is uncertain.
The Importance
China is a global economic leader, either the largest or second-largest economy based on various measures. In 2023, its GDP neared $25 trillion, highlighting its significant role in international trade, especially in Asia. For instance, in 2022, China accounted for 22.6% of Indonesia’s exports and 14% of Malaysia’s exports. Both countries also heavily rely on China for imports, with Indonesia depending on it for 28.5% and Malaysia for 21.3%. This indicates China’s substantial influence in the region.
Key Insights
China’s economy grew by 0.9% in Q3, a slight increase from Q2’s 0.7%. However, the year-on-year growth slowed to 4.6%, missing the government’s target of 5%. Retail sales rose by 3.1% in September, up from 2.1% in August, with unemployment decreasing to 5.1%. Industrial output increased by 5.4%, exceeding expectations.
Analyst Kar Yong Ang from Octa Broker noted, “The surge in industrial output and stronger retail sales suggest that government stimulus may be starting to have an impact.” However, the economy still faces risks, particularly deflation and uncertainties regarding U.S. elections. Lower exports indicate manufacturers may be reducing prices due to anticipated tariffs, especially if Trump wins the presidency.
Market Reactions
Chinese markets responded positively, with the CSI 3000 Index up over 5.5% and the Shanghai Composite Index rising more than 4%. The offshore yuan strengthened to 7.12, although the U.S. dollar remains strong against it. Asian currencies showed mixed results; the Malaysian ringgit was stable while the Indonesian rupiah strengthened. Ang mentioned, “If the PBoC continues monetary easing due to the economic data, the ringgit and rupiah may see slight appreciation, driven mainly by U.S. monetary policies and upcoming elections.”
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