CHINA’S RECOVERY CONTINUED BUT A BIT SOFTER THAN EXPECTED
- China’s Q3 GDP growth picked up to 4.9% yoy, a bit softer than expected.
- However, monthly activity data suggest the recovery is still strengthening and broadening to the demand side.
- We maintain our 2020 growth forecast of 2.1% , although weaker activity in Q3 highlights downside risks. China will most likely be one of the few countries around the globe able to post positive real growth in 2020.
- Given the ongoing demand recovery, we expect the PBoC to stay on the side-lines for the time being.
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MARKET COMMENTARY: CHINA’S RECOVERY CONTINUED BUT A BIT SOFTER THAN EXPECTED
COVID-19 FACTS & FIGURES
Pfizer and BioNTech candidate Covid-19 vaccine showed to be 95% effective in early analysis, an even better result compared to data released last week. Moderna candidate Covid-19 vaccine showed to be 94.5% effective in early trials involving 30,000 people. Switzerland announced ICU beds reached full capacity and no extra units are available. Oxford and AstraZeneca Covid-19 vaccine test results are expected by late December.
THE FED REMAINS SILENT ON CHANGES TO QE AND CALLS FOR FURTHER FISCAL STIMULUS
As widely expected, the November meeting was rather uneventful: chair Powell seized the opportunity to reiterate the strong forward guidance on rates illustrated in September and to reassure on the capability of unorthodox measures to cushion a possible downturn of the economy.
CHINA’S NEW “DUAL CIRCULATION STRATEGY”
At the end of October, China approved its “Dual Circulation Strategy” which is the new five-year economic plan (2021 – 2025). The concept has been under discussion for quite some time and President Xi highlighted it already in May. In a nutshell, the concept promotes domestic demand as the central growth engine. It foresees more independent and resilient supply chains while at the same time it intends to further opening-up the corporate sector and financial markets.