China's Equities Bounced Back After GDP Meets Estimates

1. China’s economic growth slows, but remains within expected range

China released its 2nd quarter GDP results at 6.2%. The 6.2% was its weakest in almost 30-years, but given the current landscape, it was within estimates. Markets recovered the same day the data was released as underlying data points showed signs of improvement.

While concerns that the US-China trade war has impacted the economic giant, China’s consumption sector remained a bright spark amid the murmurs. The sector contributed 60.1% to the economic expansion within the 1st half of the year, inline with the country continued shift from a manufacturing- centric economy towards one that focuses on consumption driven growth.

Table 1: Data points signals growth in June 2019

Source: Bloomberg as at 15 July 2019.

2. Markets bounced back, with consumption sector taking the lead

Investors’ sentiment improved after data points were released within expectations, and the equity markets’ performance showed for it. While broader markets had inched higher before the day close, the S&P New China Sector ex A Share Index topped the table as consumption-related stocks enjoyed a stronger climb.

Source: Bloomberg as at 15 July 2019. All returns quoted in MYR terms.

4. Gaining access to China’s resilient consumption sector

* The 12months’ Price/Earnings, Price/Book Value, and Dividend Yields financial ratios have been sourced from
Bloomberg for the S&P New China Sectors Ex A Share Index, which is the benchmark used by the TradePlus S&P New China Tracker.

Data is for 12-months for the period ending 15 July 2019.

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