Keep a close eye on China this week for two reasons.
There are the third quarter economic figures being released that will confirm the economy is slowing in a soft landing, but the stockmarket is rebounding strongly and is the fastest rising bourse globally since July, up 20%.
Either Chinese investors are getting ahead of themselves, or they have very quickly become not so worried that the clamp on the booming housing sector will not cause widespread losses and pain.
The Shanghai market jumped 12.5% in the six trading days to last Friday, despite the country’s central bank tightening controls over bank lending and property, and despite the growing pressure on China to revalue the Yuan.
The market eased half a per cent yesterday, the first negative day in seven trading sessions. Turnover was an all time high of more than $US73 billion.
The export and import figures for September were lower than for August, as was the trade surplus, but the country’s reserves jumped a hard to believe $US194 billion in the September quarter to $US2.65 trillion.
This week sees the September quarter GDP data and September activity data released.
Reflecting the drop out of double digit quarterly growth a year ago, the AMP’s chief economist Dr Shane Oliver says his group expects year-on-year GDP growth to have slowed to around 9.5% which is where the AMP expects growth to settle over the year ahead.
Growth in retail sales, industrial production and investment is likely to have remained strong.
Food price increases are likely to have pushed inflation up to 3.6% year on year (from 3.5%) but non-food inflation is likely to have continued slowing, as it has done for the past few months.
One figure to keep an eye on will be steel production, widely thought to have fallen in September, until the import figures revealed a sharp improvement in iron or imports to more than 51 million tonnes.
Iron ore imports recovered to total 52.6 million tonnes last month, the highest since April, from 44.6 million tonnes in August.
The September figure was however 19% down on the 64.6 million tonnes a year ago.
August crude steel output fell 3.8% from July to 51.7 million tonnes. That’s the second lowest level for 2010 so far.
But China’s imports of oil soared to an all time high last month, pointing to continuing solid demand for energy.
Dr Oliver says that overall, upcoming Chinese data is likely to confirm that growth remains solid and a hard landing in China is not on the cards.
The property sector continues to cool slowly.
China’s National Statistics Bureau said on Friday that property prices in 70 major Chinese cities rose 9.1% year-on-year in September, the slowest growth rate this year.
But home prices are continuing to rise.
The annual rate was down 0.2 percentage points from the 9.3% growth rate in August, but up 0.5% from August.
New home prices climbed 11.3% year-on-year in September, also up 0.5% from August.
Prices for existing homes rose 6.2% from a year earlier and 0.5% on a month-on-month basis.
Real estate investment continued to expand in the first three quarters, with the total standing at 3.4 trillion Yuan (511.4 billion US dollars), up 36.4% on the same period in 2009.
The property price growth rate peaked this year at 12.8% in April.
On September 29, the Chinese government announced further measures to try and put a lid on rising property prices, including banning loans for third home purchases and instituting a 50% down payment requirement for second-home purchases and a 30% down payment for all first-home purchases.
Last week six major banks were told to lend less for two months by having their asset ratios increased for exceeding their lending limits in September.
