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Chinese New Year sales not that hot

Business | Reuters and Avery Chen Feb 12, 2019
Sales by China's retail businesses during the Lunar New Year rose 8.5 percent from a year earlier, pushing up consumer stocks yesterday, but a cooler pace of growth added to evidence the economy is slowing. The Ministry of Commerce, in a notice on its website on Sunday, said retail and catering enterprises had revenue of 1.01 trillion yuan (HK$1.17 trillion) between February 4-10, during the holidays. It attributed the increase to stronger sales of new year gifts, traditional foods, electronic products and specialty products. The holiday is considered a barometer for Chinese private consumption as it is the time for family reunions as well as gift-giving. But the growth rate for holiday retail sales fell to its lowest since at least 2011. During the 2018's Lunar New Year holidays, the annual increase was 10.2 percent. Meanwhile, the onshore yuan fell to a two-month low ahead of Sino-US trade talks although strengthening the currency has helped China's reserves rise slightly for three consecutive months. The onshore yuan hit 6.7956 per dollar yesterday after it had changed hands at 6.7898 per dollar, 447 basis points weaker than the previous late session close while the offshore yuan fell 123 basis points to 6.7970 per dollar last night. China's reserves rose by US$15.2 billion (HK$119.29 billion) in January to US$3.088 trillion, central bank data showed yesterday. That compared with a rise of US$11 billion in December. Economists polled by Reuters had expected an increase of US$9.3 billion to US$3.082 trillion. Stephen Chiu, FX and rates strategist at China Construction Bank (Asia) in Hong Kong, said a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping is unlikely to happen before the March 1 trade deadline. "Therefore, if the upcoming high-level trade negotiation fails to reach some practical agreements and save some time for a Trump-Xi meeting, risk-averse market sentiment will continue to deteriorate. And it will boost the dollar, especially USD/RMB," Chiu said, expecting both onshore and offshore yuan to trade in a range of 6.75 to 6.83 this week. Elsewhere, state-owned media said that China's GDP growth may slow to 6.3 percent in 2019 while the GDP growth in the first quarter may fall to 6 percent. The Xinhua-run Economic Information Daily pointed out that 22 provinces lowered their GDP growth targets, cutting 0.4 percentage points on average with the largest reduction of 1.4 percentage points. New bank loans in China are expected to have surged to 2.97 trillion in January - three times the figure in December last year - a Reuters poll of 30 economists showed, as authorities continued to spur commercial lenders to extend more credit to cash-strapped companies in a slowing economy.


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