What’s going on?
Fresh data out on Tuesday showed that Chinese retail sales grew by more than expected at the start of the year, but the country might be headed straight back to its starting point.
What does this mean?
The Chinese economy was off to a flying start at the beginning of the year, as folk in the country splashed out to celebrate Lunar New Year and Beijing’s Winter Olympics. And they weren’t fussy about what they bought: spending was up in all but one of the retail categories from the same time last year. The biggest rises were in fuel and jewelry, but car sales – which actually fell during a lot of last year – chipped in too. Overall, retail sales in January and February – combined to even out the Lunar New Year’s impact since it can fall in either month – grew by 6.7% from the same time last year, much higher than the 3% analysts expected.
Why should I care?
Zooming in: Not too fast…
China’s strong start mightn’t last long: the country’s now battling its biggest surge in Covid cases since the start of the pandemic, with over 45 million people back in lockdowns as a result (tweet this). Add in that Goldman Sachs predicted last week that rising oil prices could cut China’s economic growth by 0.5%, and plenty of economists now doubt the country’s economy will hit its goal of growing 5.5% this year. And that – along with fears of new sanctions over its ties to Russia – might be why an index tracking some of China’s biggest companies fell 5% on Tuesday.
The bigger picture: Apple’s feeling it.
Lockdowns in China – the world’s biggest manufacturing hub – have been shutting down production plants around the country, and that’ll have a major impact on global supply chains. Foxconn, for one, just closed its Chinese production sites that were busy whipping up the latest iPhone 13. That could really hurt Apple’s sales, and investors know it: they sent Apple’s shares down to their lowest since November this week.
Originally Posted March 15, 2022 – Jumped The Gun
Disclosure: Interactive Brokers
Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Finimize and is being posted with permission from Finimize. The views expressed in this material are solely those of the author and/or Finimize and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
In accordance with EU regulation: The statements in this document shall not be considered as an objective or independent explanation of the matters. Please note that this document (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on dealing ahead of the dissemination or publication of investment research.
Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.