Author | Political Commissar Lu, Guo Yuwei, Jiang Dongying, Cheng Zilong, Song Yanchen, Cai Qisheng, Zhang Lihan
Economic forecasting
Key macro data for April 2024 will be released around May 10, 2024. Here, we look ahead to the relevant macro data and use this as a basis for our policy development in May 2024.
Digital pattern: Prices have entered a recovery channel. In terms of growth, exports are expected to rebound year-on-year after the seasonal impact subsides, the Qingming holiday and gasoline price hikes have supported social zero, and construction-related indicators are sluggish, but the momentum of manufacturing investment is still strong. In terms of prices, the pig production capacity is gradually decreasing, and the pig price is expected to gradually rebound year-on-year; from April, the tail factor of PPI will rebound significantly, coupled with the rise in overseas priced commodities, driving PPI to enter the upward channel year-on-year. In terms of financing, the peak maturity has dragged down the net financing of government bonds, credit supply is still not strong, and the scale of new credit and social financing may drop significantly.
Sentiment expectations: risk appetite is repaired in stages. Under the strong US dollar, the performance of the renminbi and Hong Kong dollar is relatively stable among Asian currencies, coupled with the large valuation adjustment in the previous period, attracting overseas funds to flow into A-shares and Hong Kong stocks, and risk appetite may be repaired in stages.
Policy expectations: liquidity or marginal convergence. On the demand side, net financing of government bonds in May is expected to be higher than in April, and there may be additional liquidity gaps after the "manual interest rate supplement" is stopped. On the supply side of funds, the central bank warned of interest rate risks and the Fed's interest rate cut expectations were postponed, and the need for further monetary policy easing declined. As a result, liquidity is likely to converge marginally under an overall stable pattern.
Industrial added value: 4.6% year-on-year, up 0.1 percentage points from the previous month
In April 2024, the operating rates of major industrial products diverged. Crude steel output did not rise seasonally with the policy production control and the decline in steel mill profits; the operating rate of all-steel tires related to commercial vehicles lagged significantly behind the operating rate of semi-steel tires related to passenger vehicles; the operating rates of upstream and downstream of PTA were differentiated, and the downstream operating rates were stronger than those of the upstream, continuing the trend of last month; the daily consumption of coal maintained a slight positive year-on-year growth; and the performance of real estate data was still relatively weak. Taking into account the base of last year, the industrial added value in April increased by 0.1 percentage points year-on-year or from the previous month.
Exports increased by 9.9 percentage points year-on-year, up 2.4% year-on-year
Imports increased by 6.9 percentage points year-on-year, up 5.0% from the previous month
In terms of exports, the global manufacturing boom rebounded and the base was lower, and exports in April may rebound year-on-year. From the perspective of global manufacturing prosperity, the global manufacturing PMI rose to 50.6% in March, the highest value since July 2022. At the same time, benefiting from the rebound in semiconductor demand, South Korea's exports increased by 9.0% year-on-year from April 1 to 20, up 1.5 percentage points from March 1 to 20, which also reflected the upward trend in global trade activity. In terms of base effect, exports fell by 4.8% month-on-month in April 2023, the lowest since 1996.
In terms of imports, commodity prices rebounded and the base was lower, and imports in April may rebound year-on-year. From the perspective of commodity prices, boosted by the rise in crude oil, copper and other commodity prices, the monthly average value of the CRB spot composite index in April rose by 13.8 points from the previous month to 545.3 points, which will boost the reading of mainland imports from the price level, and from the perspective of base effect, imports in April 2023 fell by 9.9% month-on-month, the lowest value in the same period of the calendar year since historical data began in 1995.
Investment in fixed assets increased by 0.1 percentage points year-on-year, down 0.4 percentage points from the previous month
The cumulative investment in fixed assets in April is expected to record 4.4% year-on-year. In terms of infrastructure investment, the issuance of new special bonds in April was still slow, and the indicators that characterize the physical workload of infrastructure such as petroleum asphalt and cement were at a low level in the same period of recent years, indicating that the growth rate of infrastructure construction in April may face slowing pressure. In terms of real estate investment, in April, the sales of new homes in 30 large and medium-sized cities and the area of land transactions in 100 cities both fell month-on-month, both of which recorded the lowest level in recent years, and the signs of improvement in real estate investment have not yet appeared. In terms of manufacturing investment, although the profits of industrial enterprises in March turned negative year-on-year, and the profit repair slowed down, the current growth momentum of manufacturing investment comes more from the cultivation and development of new quality productivity, and the growth rate of high-tech manufacturing investment and equipment and equipment purchase is still further accelerated in March, and it is expected that manufacturing investment will remain strong in April.
Retail sales of consumer goods increased by 0.6 percentage points year-on-year, up 3.7% year-on-year
During the Qingming holiday, residents' travel and rising gasoline prices supported the company in April.
In terms of catering income, residents' enthusiasm for travel during the Qingming holiday had a pulling effect on service consumption. According to data from the Ministry of Culture and Tourism, there were 119 million domestic tourism trips during the Qingming holiday, an increase of 11.5% over the same period in 2019 on a comparable basis, and domestic tourists spent 53.95 billion yuan on travel, an increase of 12.7% over the same period in 2019. In April, the average daily subway passenger volume of 19 cities increased by 7.7% year-on-year and 1.4% month-on-month, while the average daily number of domestic flights fell by 2.4% year-on-year and 0.9% month-on-month. In terms of movie box office, the average daily box office in April was equivalent to about 49% of the same period in 2019, down from 68% in March.
In terms of retail sales, rising gasoline prices may support retail sales. Under the influence of geopolitical conflicts, international crude oil prices have risen, and domestic gasoline retail prices have also risen significantly, with market prices increasing by about 3.5% year-on-year, which has boosted the retail sales of petroleum products. According to the data of the Passenger Car Association, the retail sales of passenger cars in April were about 1.6 million units, a year-on-year increase of -1.5%. Judging from high-frequency indicators such as postal express pickup volume and delivery volume, the year-on-year growth rate of logistics freight in April increased slightly compared with March.
PPI year-on-year: -2.4%, up 0.4 percentage points from the previous month
CPI year-on-year: 0.2%, up 0.1 percentage points from the previous month
In terms of industrial products, the prices of industrial products were generally stable in April, but the differentiation between varieties continued. Crude oil prices were 5.2% month-on-month in April, and the continued tension of geopolitical events has pushed crude oil prices higher, but there have been signs of easing recently. The black series medium thread, iron ore and coke were -1.0%, 4.1% and -4.3% month-on-month, and the recovery of downstream demand still needs to be boosted. Non-ferrous metal prices continued to rebound, with copper and aluminum 8.5% and 12.0% month-on-month. Overall, the April PPI is expected to be -2.4% year-on-year.
In terms of consumer goods, the prices of major consumer goods were generally stable in April. Hog prices rebounded slightly, but the market has strong expectations for the peak season in the second half of the year, piglet prices rebounded greatly, hogs in April 2.0% month-on-month, fresh vegetable prices continued to decline seasonally with warmer temperatures, -6.5% month-on-month. Gasoline prices continued to rise with international oil prices, 3.8% month-on-month. Overall, the CPI reading continues to run at a low level, and the CPI is expected to record 0.2% year-on-year in April.
New RMB loans: 0.80 trillion, down 2.29 trillion from the previous month
The scale of new social finance: 1.00 trillion yuan, a decrease of 3.86 trillion yuan from the previous month
The growth rate of credit and social finance is expected to remain stable in April. In terms of credit, from the perspective of loan demand, in terms of residential loans, real estate transactions were weak in April, and the weighted transaction area of primary and second-hand houses recorded a year-on-year increase of -30.2%, a decrease of 8.2 percentage points from the previous month. In terms of corporate loans, the construction industry started at a low level in April, and from the perspective of cement shipment rate, the average cement shipment rate in April was 38.5%, lower than 44.3% in April 2023, indicating that corporate financing demand is weak. In addition, on April 3, the State Administration of Financial Supervision and Administration and other three departments jointly issued the "Notice on Deepening Manufacturing Financial Services to Help Promote New Industrialization", mentioning that "strictly prevent the scale of loans inflated through bill discounting", and the phenomenon of bill impulse is expected to weaken. On the whole, the scale of new loans in April is expected to be 800 billion, and the corresponding year-on-year growth rate of loans is 9.6%.
In terms of social finance, from the perspective of government bonds, the net financing of government bonds may have recorded a negative value in April. On April 17, Liu Sushe, deputy director of the National Development and Reform Commission, said at the press conference of the State Council Information Office that recently, the National Development and Reform Commission has completed the preliminary screening of this year's special bond projects, which has been pushed to the Ministry of Finance and fed back to the localities. Judging from the issuance of local bonds in April, the issuance of local bonds did not speed up in April. On the whole, the new social finance in April is expected to be 1.00 trillion yuan, and the corresponding year-on-year growth rate of social finance is 8.7%.
M1: 0.8%, down 0.3 percentage points from the previous month
M2：8.3%，较上月持平
In terms of M1, as of April 29, the transaction area of commercial housing in 30 large and medium-sized cities recorded -41.6% year-on-year, and M1 remained low due to the drag of new home sales. In addition, according to the 21st Century Business Herald [1], on April 8, the self-discipline mechanism of market interest rate pricing issued the "Initiative on Prohibiting the Cultivation of Deposits by Manually Raising Deposits with High Interest Rates to Maintain the Order of Competition in the Deposit Market", requiring that from now on, banks shall not promise or pay customers in any form the supplementary interest that exceeds the authorized upper limit of the deposit interest rate. Any interest payment promise made in violation of the previous regulations shall not be paid on the interest payment date. Banks should immediately carry out self-examination and complete rectification by the end of April 2024, and submit the rectification report to the Secretariat of the Self-Regulatory Mechanism for Market Interest Rate Pricing. After the cessation of "manual interest supplement", some demand corporate deposits may be diverted to other financial assets, which will further put pressure on M1 growth. M1 is expected to decline year-on-year in April.
In terms of M2, the growth rate of social finance and credit is expected to continue to slow down in April, and combined with seasonal factors, M2 is expected to be flat year-on-year in April compared with the previous month.
DR007 in May: 1.87%, an increase of 2bp from the previous month
5月股份行NCD 3M:2.05%,较上月提高9bp
May liquidity or marginal convergence. In terms of capital demand, the downturn in the property market continues to affect household credit, but two factors may lead to incremental liquidity demand. First, the issuance of special bonds may increase, and the maturity scale of government bonds will decline, and the net financing of government bonds is expected to improve. Recently, the National Development and Reform Commission and the Ministry of Finance completed the screening of local government special bond projects in 2024. Among them, the National Development and Reform Commission will review and check the investment fields and preliminary work of the project, and the Ministry of Finance will review and check the balance of project financing income. After the screening is completed, the issuance of special bonds is expected to increase gradually. Second, after the "manual interest supplement" is stopped, some corporate deposits may be transferred to wealth management products, and commercial banks may have additional liquidity gaps, which need to be filled with the help of the interbank market. In terms of capital supply, the central bank has recently warned of interest rate risks, and the Fed's interest rate cut is expected to be postponed, and the monetary policy may be stable, and the need for further easing is not strong.
Note: [1] Source: 21st Century Business Herald, "Banks will deduct points until one vote veto!", (2024/4/12), [2024/4/26], https://baijiahao.baidu.com/s?id=1796069713040521692&wfr=spider&for=pc
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