Maybank FX Flash - China: 1Q Growth, Not As Bad As Feared

China: Q1 Growth, Not as Bad as Feared

       China 1Q GDP came in at 7.4%y/y, above the expected 7.3%. Investors cheered the rather decent data though equity gains were modest as details still indicate a mild slowdown. 2Q growth is the real test.

       High frequency indicators like the liquidity numbers, retail sales, industrial production and urban FAI suggest modest slowdown.

       We expect volatility to persist in the near-term. USD/CNY fixing has been bias to the upside as PBOC continues to stamp out any notion of a one-way CNY appreciation. Nonetheless, we are still sanguine on China’s capability to juggle financial reforms, concomitant risks to the financial sector and last but not the least, growth. We look for USD/CNY to trend lower with greater momentum in 2H to end the year at 6.05.

Rgds,

Maybank FX Research

Global Markets

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