EUR 155.78 For Business Accounts Only

030518 CGI Weekly Global Equities Strategy Update

In Asia, China aims to expand its economy by around 6.5% this year, the same as in 2017, while pressing ahead with its campaign to reduce risks in the financial system, Premier Li Keqiang said today. The goal was kept unchanged even though the economy grew 6.9% last year and exceeded the government's target. China has cut its budget deficit target for the first time since 2012, suggesting Beijing will be more watchful of fiscal spending while not tapping the brakes so hard that it risks a sharper slowdown.

China government officials were also responding to “trade war talks” by US President Trump buy saying trade wars weren’t good for anyone, and a lose-lose scenario for all trading nations, a day after Trump said he intended to put duties of 25% on steel imports and 10% on aluminum products. Trade tensions between the world's two largest economies have risen since Trump took office in 2017, and although China only accounts for a small fraction of US steel imports, its massive industry expansion has helped produce a global glut of steel that has driven down prices. Negotiations and mutual opening of markets would be the best ways to resolve trade frictions, Chinese Vice Foreign Minister Zhang said at a briefing ahead of China's annual plenary session of parliament. "China does not want to fight a trade war with the US, but will absolutely not sit by and watch as China's interests are damaged," Zhang, who is a spokesman for parliament and was formerly an ambassador to the US, said. "If US policies are made on the basis of mistaken judgments or assumptions, it will damage bilateral relations and bring about consequences that neither country wants to see,” Zhang said.

China is faced with a temporary global decrease in demand for its goods and services, export orders, a decrease in the composite index, manufacturing output, factory employment and a slump in services PMI confirmed the cool-off in demand. China export growth is a key barometer we are watching for slowdown signals, especially with the continued appreciation of the RMB we will get to see China’s trade numbers on Thursday this week. The Caixin China Composite PMI dropped to 53.3 in February of 2018 from a seven year-high of 53.7 in the previous month. Services sector growth slows (PMI at 54.2 in February of 2018 from a 68-month high of 54.7 in January) while factory activity expanded modestly (PMI at 51.6 from 51.5)