London 13/09/2016 -
| |
Month |
ACTUAL |
Forecast |
Previous |
| Industrial Production y/y |
August |
6.3% |
6.2% |
6.0% |
| Fixed Asset Investment ytd/y |
August |
8.1% |
7.9% |
8.1% |
| Retail Sales y/y |
August |
10.6% |
10.2% |
10.2% |
Comment:
The Chinese economy has shown further signs of stabilisation, with the latest raft of activity data for August (industrial production, retail sales and fixed asset investment) surprising to the upside. Although a number of signs of weakness remains, most notably in the labor market, we think that the PBOC is unlikely to ease its accommodative stance in near term to avoid to fuel (unnecessarily) a bubble. Against this macro stabilisation in China, fears over an uncontrolled slowdown have eased, which could prompt some investors to rebuild some long positioning across the base metals complex. Because each base metal has unique idiosyncratic risks apart from the macro, we think that investors will continue to overweight zinc and tin due to their stronger fundamentals on a relative basis.
