China (CNY, CNH)
Macro: The economy is recovering and we expect 8.1% growth in 2013 compared to 7.7% in 2012. Our SEB China construction indicator has reliably picked the upturn in the domestic cycle starting in June of last year and continues to recover. Initially, pick up in infrastructure spending helped construction activity but what will keep the recovery going are small rise in property prices and monetary stimulus. The number of Chinese cities experiencing month on month price increases have been growing since September, which implies that demand is outstripping supply and clearing out inventories. In addition, in places like China where deposit rates remain low, households will become attracted to moving funds away from deposits to purchasing homes as a form of saving. Furthermore, non-bank lending continues to grow and is providing monetary stimulus. As Chart 11 shows, bank lending was lacklustre in 2H 2013 but total financing grew from other financing channels such as corporate bond market and trust products. As we enter a new year, bank lending is getting its seasonal boost as banks get new annual calendar lending quota and points to further monetary stimulus.
Click here to read the full report: Market Research
SEB