16.04.25 - China - strong set of data

This morning, China reported a strong set of data and surprising strength. China’s economy grew by 5.4% in the first quarter of 2025, higher than the 5.1% growth expected.
In March, the industrial output surged 7.7% from a year earlier, higher than median estimates of 5.8%. The country’s retail sales rise 5.9% on an annual level in the same period.

In the meanwhile China signaled to be open for talks. Before though, they want to see a number of steps from President Donal Trump’s administration before it will agree to trade talks, including showing more respect. Before, China stopped the export of rare earths and today, Hong Kong government announced that Hong Kong Post will immediately suspend accepting packages for delivery to the US.

Markets: Asian markets traded mostly lower this morning.

My view: China's latest production and consumption figures show surprising momentum, even ahead of this month’s tariff tensions. However, despite the strong data, concerns over the looming trade barriers weighed on investor sentiment, sending Asian stock markets lower this morning, led by the tech stocks after Nvidia’s and ASML disappointing news.

For me, the uptick in consumption looks particularly encouraging, as it has lagged since the pandemic. If this rebound proves to be sustainable, it could make China’s economy more resilient to tariff-related shocks, especially in contrast to the US, where consumer sentiment has already fallen to historic lows.

Although I maintain a positive outlook on China’s stock market, I took some profit before the financial market before the recent market turmoil began. I still hold a significant allocation, but currently holding off increasing exposure as risks of further setbacks remain elevated, particularly if the US economy slides into a recession.

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