The monthly economic data dump is out.

Firstly, GDP fractionally better than expected. Volatile and weak since the COVID era, however today’s print will give some confidence to the China bulls that perhaps the worst is past.


Equally, GDP is largely backwards looking. The rate cut (benchmark lending rate) announcement that accompanied the release is probably a stronger sign that growth is anaemic.

The monthly aggregates, shown below, remain awful to our mind.


There had been some investor enthusiasm for China, and China’s property stocks more broadly, late last week with the modest deceleration in the pace of property price declines.


However you’ve certainly got to squint to see it.


Overall, little change in our view. Growth is weak, structurally so, however the PBOC appetite to undergo the painful sectoral reforms needed to address imbalances (e.g. too much fixed asset investment, not enough household consumption) is modest.

Longer run, they don’t have much choice, and this underpins our concerns about commodities, and the sustainability of their presently elevated prices, as China remains a disproportionately large buyer.

Whilst we hold some BHP in our direct equity portfolios, most of our commodity exposures are in oil and gas, with some alumina exposure, rather than iron ore and steel.

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