8th Aug 2023 11:23
(Alliance News) - News of disappointing Chinese trade data overnight on Tuesday weighed on China exposed stocks, as it appears that the country is not enjoying its post Covid recovery which markets had hoped for.
"The Chinese economy continues to splutter and that's bad news for a FTSE 100 chock full of companies which are closely tied to its fortunes," said AJ Bell investment director Russ Mould.
"This time it's trade data which has come in way short of expectations. China has been trying to move to being an economy driven by domestic consumption but the level of support provided to households during Covid and the country's particularly stringent and long-lasting Covid restrictions didn't match up to those seen in the west."
Early Tuesday, China's trade numbers disappointed. Last month, the world's second-largest economy suffered its biggest drop in exports for more than two years.
Sales of Chinese products to foreign markets plunged 14.5% on-year in July, a third consecutive drop, according to the customs authority. The decline was bigger than expected and the heaviest drop since the start of 2020, when the economy came to a standstill in the early weeks of the Covid-19 pandemic.
The data will likely ramp up calls for leaders to do more to revive growth, having laid out a series of stimulus measures in recent weeks.
"With numbers this poor it surely can't be too long before Chinese policymakers take further steps to support their economy with further easing measures, however, there appears to be some reluctance to do so at any scale for the moment, due to concerns over capital outflows," CMC Markets analyst Michael Hewson commented.
On the back of the data, Chinese markets were under pressure. The Hang Seng index closed down 1.8%, whilst the Shanghai Composite closed down 0.3%.
The news rippled onto China exposed stocks in London, too. Asia-focused bank Standard Chartered was down 1.7% on Tuesday morning. Insurer Prudential, which is also Asia-focused, shed 1.0%.
Meanwhile, miners Anglo American and Antofagasta were down 2.1% and 2.0%, respectively.
Investors will now turn their focus onto an inflation reading on Wednesday.
Wednesday's reading is expected to confirm that the Chinese economy is not enjoying the post-Covid-19 bounce back some had hoped. According to FXStreet cited consensus, consumer prices are expected to have fallen 0.5% on-year, having tread water in June.
By Sophie Rose, Alliance News reporter
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.
Related Shares:
PrudentialAnglo AmericanStandard CharteredAntofagasta