China Alternative Data Tracking: The recovery in government bond issuance is limited, and fiscal implementation is expected to accelerate in Q3 (J.P. Morgan)
JPMorgan Chase's latest China alternative data report shows that the recovery in government bond issuance is limited, Q2 GDP is lower than expected, export growth has slowed down due to the impact of typhoons, some areas of industrial production are under pres
JPMorgan Chase's latest China alternative data report shows that the recovery in government bond issuance is limited, Q2 GDP is lower than expected, export growth has slowed down due to the impact of typhoons, some areas of industrial production are under pressure, and housing sales have shown marginal improvement, but the decline in agricultural product prices has dragged down CPI. Based on this, the report predicts that fiscal policy will be accelerated in Q3 to utilize the remaining annual quota, and the low-confidence interest rate cut expectations will be postponed from Q3 to Q4. The market has certain expectations for the implementation of fiscal policy, but high-frequency data shows that the actual implementation speed is slow, which may lead to a further downward revision of market expectations for the effect of the policy. One-sentence conclusion: The actual implementation of China's fiscal policy is slower than market expectations and the economic data is weak. This has increased the market's expectations for stronger stimulus policies, but it has suppressed market sentiment in the short term. Positive/negative: Short-term negative for sectors related to China’s domestic demand (such as cycle, consumption). Market expectations for policy stimulus may be too high, and poor actual data will lead to poor expectations. Catalysts: 1) The scale of Q3 government bond issuance and the progress of the use of special bonds; 2) The specific deployment of fiscal policy at the July Politburo meeting; 3) Marginal changes in real estate sales and investment data.