According to Danske Bank analysts, China’s leading indicators – both the official and the Caixin PMI, gave clearer signs of recovery in the world’s second-largest economy and now support prospects for a moderate recovery in 2019.
Key quotes:
“With the March release of PMIs, we see clearer signs of recovery in China. The rise in March may be too good to be true and we could see a correction in April (not least in the Caixin version, which reached a quite high level). However, the improvement in China is visible in a broad range of indicators now, such as metal markets and PMI in other Asian economies, which have a high share of exports to China.”
“Looking forward we continue to look for a moderate recovery in 2019 on the back of stimulus kicking in with more force and reduced uncertainty, as we expect a US-China trade deal in coming months. On the back of this outlook, we look for more upside in emerging market assets and Chinese equities. The disinflationary pressure from China is also set to subside over the year, as commodity prices rise gradually.”
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