The Week In Hindsight, 20 June 2014
The SSE Index fell throughout the last week in what was a relatively quiet period for Chinese economic data. No major figures were released over the week however, housing data did indicate a decline in CNY home prices during the previous month for the first time in two years.
Although the news was enough to prompt concern in some circles that the world’s second largest economy could be about to flatline, Premier Li Keqiang spoke during his visit to London where he tried to play down the challenges facing China.
“Some may ask if the slowdown will continue, or whether China will see a hard landing. I’m here to say honestly and seriously: no,” – Li Keqiang
Despite the downward trajectory of the index last week, Monday brought hopes of a revival for Chinese shares as the HSBC Flash Manufacturing PMI broke back above the all important 50.0 level and into expansion territory for the first time in 2014. The news helped to drive the SSE index off from last week’s lows ahead of another quiet week for the economic data calendar.
Going forward, it is likely that CNY equities will remain reactive to events on the global stage in compensation for the lack of substance in terms of economic numbers. Moving into the close of June, we expect eyes to begin to revert toward CNY GDP figures and the meeting between the Politburo and State Council during the opening stages of July.