Weak Data Weigh On China ETFs

March 18, 2014

Every recent economic report out of China comes with disappointment.

China Declining Retail Sales

  • The retail sales chart above highlights China's ongoing challenge in shifting from an export-driven economy to a consumer-based economy.
  • If retail sales continue to disappoint, it will weigh heavily on ETFs such as the Global X China Consumer ETF (CHIQ | B-39).
  • However, retail sales aren't the only disappointing economic results coming out of China this year:
  • PPI and CPI data have been weak, indicating lower-than-expected demand from business and consumers
  • Exports have fallen off: Although a drop in exports is welcomed as the government attempts to wane the economy from its export-dependency, the declines have far exceeded expectations and may point to a "hard landing."
  • Industrial production recently "missed" expectations by the most in recent memory.
  • Fixed-asset investment is at its lowest level in more than a decade.
  • Official government PMI figures are barely expansionary, and alternative measurements—such as those produced by HSBC and Markit—indicate contraction.
  • Cumulatively, the weak data will weigh heavily on some of the most popular China ETFs:

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