At the point of writing, the China A-share market (CSI 300 Index) is up year to date on the back of bottom fishing by investors and state-ordered buying1. The gains have come against a backdrop of (modestly) improving economic fundamentals. Power generation grew 8.3% yoy in January to February while industrial production increased 7% from the year before, beating consensus expectations of a 5.2% gain. Exports during the first two months of the year were 7% higher than the year before, versus expectations of a 1.9% increase. February’s consumer price inflation also inched up +0.7%yoy after four months of deflation. More recently, the NBS manufacturing PMI beat market consensus by rising to 50.8 in March from 49.1 in the previous month, supported by gains in new orders and production. This was the highest reading in 12 months and reflects an improvement in both external and domestic demand. Fig. 1. Have China’s economy and market turned the corner?
Read China: Awaiting the catalysts
