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China’s February Trade Data Compounded Slowdown Fears

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China’s February trade data

On March 8, China released its trade data for February. China’s exports in US dollar terms fell 20.7%, while its imports fell 5.2% YoY (year-over-year). The data were worse than analysts’ expectations. The analysts polled by Reuters expected China’s exports to fall 4.8%. China’s imports were expected to fall 1.4%.

In January, China’s exports rose 9.1%, while its imports fell 1.5%. China’s January trade data exceeded analysts’ expectations by a wide margin. However, the February trade data compounded the fears about China’s slowdown. The 20.7% YoY contraction in China’s exports is the worst since February 2016. China’s trade surplus also narrowed to $4.12 billion last month.

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Lunar New Year

China’s economic data could offer misleading signals in January and February due to the timing of Lunar New Year holiday, which impacts its economic activity. In 2019, the Lunar New Year was at the beginning of February. The holiday was in the middle of the month in 2018. Even accounting for the Lunar New Year holidays, China’s exports and imports have fallen on a yearly basis in January and February combined.

Price action

Looking at Chinese stocks (FXI) (TCEHY), Alibaba (BABA), Baidu (BIDU), JD.com (JD), and NIO (NIO) have risen 29.4%, 4.5%, 33.0%, and 11.3%, respectively, based on their closing prices on March 7. Advanced Micro Devices (AMD), NVIDIA (NVDA), Micron (MU), Apple (AAPL), and Intel (INTC) have risen 19.6%, 11.9%, 19.2%, 9.8%, and 12.8%, respectively, during the same period.

In this series, we’ll see what China’s February trade data mean for metal and mining investors (QQQ). Let’s start by looking at US steel companies’ perspective.

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