(01 FEBRUARY 2018)DAILY MARKET BRIEF 2:Chinese Manufacturing PMI progresses, though weaker than expected

Chinese economy has proven itself robust last month. Showing signs of continuous progression in manufacturing production following Chinese New Year, Chinese January PMI was at 51.3, slightly weaker than December (51.6), essentially caused by Peking’s government initiative to reduce polluting industries (e.g. heavy and manufacturing industries) and reducing shadow banking across the country.

Chinese December 2017 Y/Y Exports and Imports of 10.90% (9.10% consensus) and 4.50% (13% consensus) respectively also confirm our view that Chinese strong economic growth in 2017 will certainly be slower in 2018, though more vigorous than expected. With a Q4 GDP Y/Y of 6.80% (6.80% – 6.90% range maintained since April 2017), we remain confident that China will maintain this pace for 2018 (around 6.70% – 6.80%). Other economic data such as December CPI Y/Y at 1.80%, December Retail Sales Y/Y at 9.40% remain conclusive for a good year in China in 2018.

By Vincent Mivelaz