Pace Of Expansion Expected To Slow

The pace of increase in most monthly indicators is expected to slow in April, figures are due to hit the wires at 0300BST/1000HKT.

• Morgan Stanley expects industrial production to grow 10.5% Y/Y against consensus for 10.0%, compared to 14.1% in March. They say "mid- to downstream production likely remained resilient on the back of global demand recovery, but upstream production may have softened due to a rise in global raw material prices, which likely constrained production in related sectors, and continued emission-related production controls for steel and coal sectors." As a reference the NBS and Caixin manufacturing PMI' output component fell 1.7pts in while the Caixin manufacturing PMI's output component rose 0.8pts in the period.
• Fixed Asset Investment is expected to print 20.0% from 25.6% in March. JP Morgan writes "we expect a rotation from public to private FAI in 2021, and from real estate to manufacturing investment. In 2020, a significant portion of the fiscal package was used to support public investment, especially in infra-FAI and shanty town renovation. Such investment dynamics will likely shift in 2021, as public investment moderates with the normalization in fiscal policy (the quota for special local government bonds was lowered marginally to 3.65 trillion yuan for this year, and we expect the government to step up efforts to contain LGFV financing). Besides, we expect the notable slowing in credit impulse will lead to softening in the credit intensive sectors, such as real estate FAI. For the manufacturing sector (which has been lagging in the early stage of post-virus economic recovery), overall industrial sector recovery has led to rebound in industrial sales and profits, laying the ground for solid growth in manufacturing FAI this year."
• The pace of growth in retail sales is expected to moderate to 25% in April from 34.2% previously on a fading base effect.