China October Trade Data Fails to Lift Shanghai Index

  • China released its October trade data today. Although the country’s exports and imports fared better than expected, the data failed to lift the Shanghai Composite Index.

Today, China’s October trade data report revealed that its exports fell 0.9% YoY (year-over-year), and its imports fell 6.4% YoY. The numbers beat expectations. Analysts had forecast China’s exports to fall by 3.9%, and its imports to tumble 8.9%. Furthermore, the data showed some improvement from September, when China’s exports and imports fell 3.2% and 8.5%, respectively, and were weaker than expected.

Chinese export and import data

China’s imports have sagged this year amid a domestic slowdown. The country’s imports have fallen YoY in nine out of ten months. And whereas China’s October trade data beat expectations, it failed to lift the Shanghai Composite Index today. Notably, China’s October manufacturing PMI data, released November 1, was also better than expected. The reading showed expansion in China’s manufacturing activity and surged to a two-and-a-half-year high.

US-China trade war and China’s October trade data

China’s trade surplus with the US has been a hot political potato. Donald Trump has imposed tariffs on billions of dollars in Chinese products in a bid to pressure the country into a favorable trade deal. Trump’s tariffs have impacted China’s exports to the US, which fell 11.3% YoY to $347.8 billion in the first ten months of 2019. In percentage terms, US exports to China have tumbled even more sharply, but in absolute terms, China’s US-bound exports have fallen more due to the huge trade surplus in China’s favor.

The US-China trade war has been like a hanging sword for investors. With the countries set to soon sign phase one of the deal, there has been renewed optimism that has lifted equity markets globally, including the Shanghai Composite Index. However, there have been nasty surprises in the US-China trade talks, and a trade deal may not necessarily resolve the global slowdown. For more analysis, read US-China Trade War: There’s No Miracle Deal for more analysis.

Shanghai Composite versus Hang Seng Index

The Shanghai Composite Index closed 0.50% lower today despite China’s better-than-expected October trade data. Year-to-date, the Shanghai Composite is up 18.9%. The Hang Seng Index has underperformed the Shanghai Composite, and is up a mere 6.9% year-to-date.