China: August activity data was stronger – RBC CM

Sue Trinh, Senior Currency Strategist at RBC Capital Markets, notes that the China’s August activity data was stronger, with IP, Retail Sales, and FAI growth all beating expectations.

Key Quotes

“Government spending has been doing a lot of the heavy lifting—spending accelerated from 0.3%y/y to 10.3%y/y in August while revenue growth slowed from 3.3%y/y to 1.7%y/y. How sustainable this is is another matter.

On funding conditions, PBoC used the 28-day reverse repo for the first time since 5 Feb, ahead of the mid-Autumn festival and National Day holidays, aimed at avoiding a holiday-induced cash crunch while at the same time limiting leverage in the bond market through cutting the supply of short-term cash. CNH funding eased as HKMA provided liquidity support.”