China macro

The China money and credit monthly data dropped; overall, quite weak.

No big bazooka or stimulus here. Total social/system financing (credit aggregates) continued to moderate (8.72% YoY) and M2 (broad) and M1 (narrow) measures of money supply growth likewise moderated.

Import and export data (see second column, below) was likewise quite modest, exports down 3.8% in CNY on a YoY basis, which does suggest some fairly weak global demand, for China’s exports at the least, and imports at 2% are still very flat, suggesting weak domestic demand.

So not a great set of numbers, at all, and it continues to make us surprised at the ongoing demand for industrial metals. In the case of iron ore, many look to India as they key reason for support, and that is perhaps a fair point, but it is difficult to see how the rise of India perfectly offsets the decline of China, but in a story in which supply is constrained, perhaps you can make a case for support.

News of the LME banning select Russian origin metals (aluminium, for example) also sent prices higher of late.

Overall, we remain underweight metals and mining in our direct equity sleeves, but do have positions on via the managers in both Australian and international equity exposures.

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