China’s trade data
On February 14, China released its January trade data. China’s exports in US dollar terms rose 9.1%, while its imports fell 1.5% YoY (year-over-year). The data were better than analysts’ expectations. In December, China’s exports fell 4.4% YoY, while its imports fell 7.6%. In December, the exports and imports were lower than analysts’ expectations.
While China’s January trade data were better than expected, investors should still be cautious. China’s economic data in January and February could offer false signals due to the Lunar New Year holidays. In 2019, the Lunar New Year fell in early February.
Looking at the January trade data, the imports fell and the export growth was decent. China’s imports offer a reflection into its domestic economy, while the country’s exports can offer clues into the global economy’s (ACWI) health. If the January trade data are an indication, China’s economy might be set for another slowdown this year. While investors shouldn’t base their conclusions on single data points, we have seen disappointing data points from China (EEM). The Caixin/Markit Manufacturing January PMI showed a contraction in China’s manufacturing activity for the second month. The reading was 48.3—the lowest level since 2016.
Companies, including Apple (AAPL) and NVIDIA (NVDA), have said that China’s slowdown is hurting their earnings. Looking at Chinese stocks (TCEHY) (FXI), Alibaba (BABA), Baidu (BIDU), and JD.com (JD) have risen 23.6%, 9.61%, and 7.5 % year-to-date, respectively, based on their closing prices on February 13.
China’s trade data are also scrutinized due to its trade surplus with the US (SPY), which we’ll discuss in the next part.