China’s Trade Surplus Expands, Australian Indices Still Rise

Chinese trade balance falls

China’s trade surplus widened to $52.3 billion in July from $48.1 billion in the previous month. It’s expected to narrow to $47.6 billion. Exports fell by 4.4% on an annual basis in July—an improvement from the 4.8% decline in June. Imports fell by 12.5% in July on an annual basis—compared to the 8.4% fall in June. There’s an ongoing gradual transition taking place in the Chinese economy as it moves away from being driven by industrial growth to a more consumption and services-driven economy.

China’s Trade Surplus Expands, Australian Indices Still Rise

Australian indices ignore the fall in Chinese imports

Australia depends highly on China for exporting metal goods. However, the data release didn’t have a negative impact on Australian indices. The iShares MSCI Australia (EWA) was trading higher by 0.63% at 2 PM EST. The Australian dollar was also trading on a strong note against the US dollar on Monday. This signaled that the correlation between Australian markets and Chinese macroeconomic data might be weakening.

On the other hand, the iShares China Large-Cap (FXI) and the iShares MSCI China (MCHIwere trading higher by 0.74% and 0.67%, respectively, at 2:00 PM EST on Monday.

Trade surplus rose in Taiwan

The trade surplus also increased for Taiwan to $3.6 billion in July—compared to 3.3 billion dollars in the previous month. It was short of estimates of $3.8 billion. Imports fell by 0.2% on an annual basis in July—better than the 10.0% fall in the previous month and better than expectations of a 5.0% decrease. The fall in the imports of mineral goods and base metal articles contributed to the decrease. On the other hand, Taiwan’s exports increased by 1.2% in July on an annual basis—the first expansion in the last 18 months. It was primarily driven by growth in exports of parts for electronic products. The iShares MSCI Taiwan (EWT) and the iShares MSCI All Country Asia ex Japan (AAXJ) were trading higher by 0.32% and 0.67%, respectively, at 2:00 PM EST on Monday.