China: Retail sales growth slowing and industrial production growth rising – RBC CM

Research Team at RBC Capital Markets, suggests that China’s recent monthly activity numbers reinforced our concerns about the economic rebalancing process in China with YTD retail sales growth slowing and industrial production growth rising, albeit marginally.

Key Quotes

“The Quarterly Manpower Survey overnight gave us even more conviction. The net employment outlook fell from 5% to 2% for the coming quarter (Q3), equal to the record low for the series. Weakness was broad-based across sectors, with mining/construction the only bright spot.

We think MSCI’s decision is finely balanced. Issues regarding share suspensions and beneficial ownership have been tackled, but capital mobility restrictions remain challenging. In the event of inclusion, we expect a partial inclusion factor of 5%, which gives A-shares a 1.1% weight in the MSCI EM Index. Any decision will be implemented in June 2017.”