Fears of a Chinese hard landing have repeatedly erupted this decade, yet the economy has managed to continue its modest deceleration path without derailing. The slowdown last year, and parallel contraction in global trade, rekindled these concerns, but it appears that China has once again “disappointed” the bears.
We recently updated our views on the Chinese economy and equity market, and concluded on an upbeat note. The manufacturing/trade slump is over, and overall economic conditions are healthy. Consumption is a soft spot, but even here there are recent signs of stability.
The stabilization in China is positive for the domestic equity outlook, and will also reduce risks for global equities, especially the euro area. The latter was hit hard by the contraction in global trade, given that the region trades heavily with Asia/China. While regional manufacturing data and surveys remain weak, the euro area should be next to positively surprise investors – stay tuned.