China: Disappointment all around – TD Securities

According to analysts at TD Securities, there was disappointment for China yesterday on a couple of fronts as contrary to most expectations China was not included in the FTSE Russel WGBI meaning that it could lose or at least not gain around $5-7bn of potential inflows per month.

Key Quotes

“Bad news for China was good news for other countries in Asia especially Malaysia which looked as though it was going to be taken out of the index. Secondly the US imposed sanctions on several Chinese companies for importing Chinese oil which showing that Iran is still an issue between the US and China.”

“Data today was disappointing as well. Industrial Profits fell sharply from 2.6% y/y in July to -2.0% y/y in August. The fall was due to a slowdown in industrial production and sales, the deeper drop in producer prices and super typhoons hitting the nation, according to a statement from the National Bureau of Statistics. The weakness of the economy looks set to continue into September despite trade tensions easing somewhat since August.”