If Five Was Seven

by Michael J. Howell20. April 2014 12:23
Chinese Liquidity touched a lowlish index level of 31.1 in March according to our GLI data. Consistent with these persistently low macro-liquidity conditions, the Chinese State Statistics Bureau reported a weak Q1 GDP number. Or did they? The headlines trumpeted another 7.4% quarterly growth rate. All seemingly fine, except that this misleading number is a year-on-year increase and not a quarter-on-quarter one. Using quarterly, annualised data, Chinese GDP slowed markedly in Q1, 2014 to a 5.7% growth rate, or barely, above trend, and a sharp deceleration from the Q3, 2013 rate of 9.5% and the Q4 7.0% clip. Middling growth for the Middle Kingdom! Tight Liquidity plainly matters. If investors are realistic they must now cut at least 2-3% points from consensus Chinese GDP growth expectations for 2014.


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