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    The economic monthly data has risen and fallen. Real estate has become the "Dinghai God Needle"

    2019-05-15 13:07:13

    Financial sector websiteDeng Haiqing Chen Wei

    Industrial added value fluctuates greatly from January to April, and should look at the cumulative value rather than the single month value.

    The industrial added value in March far exceeded market expectations. The industrial added value in April was far below market expectations. On the one hand, there were temporary factors caused by the Spring Festival and tax cuts (production in January and April was concentrated in March). On the other hand, market expectations reflect a large misjudgment of the Chinese economy.

    The market is very pessimistic about the economic expectations in March, and the economic expectations for April are too optimistic, and there are actually problems.

    We are just the opposite of market expectations. We are very optimistic about the March economic data, and we are cautious about the April economic forecast, mainly because of the full understanding of the Spring Festival factor and the tax cut effect.

    Aside from the single-month data and temporary factors, we are still generally optimistic about China's economy in 2019. From the economic data, the growth rate of social welfare in January-April and the growth rate of industrial added value in January-April are clear. It shows that the economic turning point has emerged.

    Due to the large fluctuations in data from January to April, we believe that the cumulative value of January-April is more reflective of the real situation of the economy.Because regardless of the Spring Festival effect and the tax cut effect, it will only lead to changes in the distribution between the months of January and April, rather than changing the overall results of January-April.

    From January to April, the cumulative value of industrial added value increased by 6.2% year-on-year. This growth rate is much higher than 5.7% in the fourth quarter of 2018, and higher than 6% in the third quarter of 2018.From the point of view of industrial production, the economic turning point has not changed.

    The decline in consumption in April is indeed related to holidays, but the cumulative growth rate in January-April is still low.

    The growth rate of consumption in April dropped sharply, significantly lower than market expectations and previous values, the lowest growth rate since 2003.

    In terms of categories, almost all of the growth rates of the sub-items have declined. Only the growth rate of beverages and drugs has increased. The growth rate of automobiles has rebounded from March but still has a negative growth.

    The Bureau of Statistics' explanation of the sharp decline in consumption data is the factor of holiday reduction. The Statistics Bureau also stated that "if this factor is deducted, the total retail sales of social consumer goods in April will be about 8.7% year-on-year."

    Many people in the market dismissed the official interpretation of the Bureau of Statistics. For example, the industrial added value data for January-February was only 5.3%. The Bureau of Statistics explained that because of the Spring Festival factor, it also stated that “the Spring Festival factor was removed, and the national scale was 1-2 months. The above industrial added value increased by 6.1% year-on-year, but the market is basically no one believes.

    And we are carefully analyzing the interpretation of the statistical value added by the Bureau of Statistics for January-February, which is believed to be true and credible. It is speculated that the production that was underestimated in January-February due to the Spring Festival factor will be reflected in March, accurately predicting March. Industrial added value far exceeds market expectations.

    For the impact of the holiday effect expressed by the Bureau of Statistics on consumption, our statistical historical data found that this effect does exist.For example, the holiday in June 2018 was significantly higher than that in June 2017, which really led to a sharp recovery in consumption in June 2018. Similar examples include September 2018 and March 2019, with more holidays and higher consumption. Examples of fewer holidays include April, May, July, and October 2018, and these months have indeed slowed down year-on-year growth.

    The reduction in holidays in April 2019 was more serious than in the previous months of 2018, so the decline in consumption in April 2019 was indeed largely related to less holidays.

    More accurate is also the cumulative year-on-year consumption in January-April, because the holidays from January to April 2019 are the same as those in January-April 2018, and the cumulative growth rate has eliminated the impact of holidays.

    From the cumulative year-on-year comparison, the company's zero-year growth rate was 8% in January-April, which was lower than 8.3% in the fourth quarter of 2018, and was significantly lower than the 9% in 2018. This shows that since 2019, consumption has not recovered, and in the context of economic restructuring, consumption promotion, and tax cuts, household consumption has indeed yet to be improved.

    Real estate data continues to be significantly better than market expectations

    For the Chinese economy in 2019, the market is most worried about two, one is real estate and the other is external demand.However, as of April, real estate has continued to exceed market expectations, but it has become one of the most important factors in the Chinese economy.

    From January to April, the growth rate of real estate investment continued to rise 0.1% to 11.9%, which was significantly higher than the 9.5% for the whole year of 2018. From the growth rate of real estate sales, real estate sales in January-February fell sharply, but began to rebound sharply in March. The cumulative sales growth rate in January-April has rebounded to 8.1%. In the context of last year's base sales growth is not too low, this growth rate is quite ok.

    From the real estate construction and new construction area, it is even more unexpected.The new construction area of ​​real estate in January-February was only 6% year-on-year. At that time, many people in the market thought that real estate would not work, but it has already rebounded sharply to 13.1%, and the new construction in 2018 is an absolute high base. In terms of construction area, the cumulative value in January-April was 8.8%, which was the highest growth rate since 2015, and even significantly higher than the economic recovery cycle of 2016-2017.From the perspective of real estate funds,The same conclusion is similar, still better than market expectations.

    Looking at real estate stocks,Destocking, which began in 2016, continues. At present, real estate inventories have returned to the mid-2014 level. This aspect is related to the overall shift of real estate companies to high turnover strategies, but it does indicate that the overall risk of real estate is not large.

    In 2019, real estate has not only become a factor dragging down the Chinese economy, but has become the key to economic stability. From the current sales, start-up, in-place funds, and inventory, real estate may still stabilize the Chinese economy.

    Moderate economic recovery, avoiding two misjudgments

    Since the end of 2018, we have always emphasized the avoidance of two misjudgments of the economy:

    The first type of misjudgment is that the economic downturn should be taken and strong incentives should be adopted;

    The second type of misjudgment is that the Chinese economy will recover soon and there will be a V-shaped rebound.

    In January-February 2019, the market was extremely pessimistic about the economy. Actually, it was the first type of misjudgment; after the March data was released in April 2019, the market began to be blindly optimistic about the economy, and the second misjudgment occurred.

    There has been no change in our view that the Chinese economy will periodically rebound in 2019, but this is a mild recovery and the foundation for a sharp economic recovery is not available.

    Different from the past, the past economic recovery must have a substantial leverage, such as full leverage in 2009, 12-year local government plus leverage, 16-year residential real estate plus leverage, and this round of policy-appropriate leverage is small Micro, but Xiaowei is quite different from previous previous lever-added subjects, with low transmission efficiency and a slow variable to the economy.

    The economic data in April was generally lower than market expectations. The market is renewed with pessimistic expectations for China's economy. This is still a single month of excessive attention to economic data. We believe that we should pay more attention to the cumulative year-on-year and long-term trend of economic data.

    (This article is the author's personal opinion and does not represent the position of the organization)

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