Sell-Side Updates Post Yesterday's China Q1 GDP & Mar Activity Prints

Both Nomura & Goldman Sachs expect further policy support post yesterday's China data outcomes, see below for more details.

Nomura: "Q1 real GDP growth was above consensus, while March activity data were well below expectations. This inconsistency reflects the difficulty in interpreting and forecasting China’s macro data. We expect GDP growth to trend down to below 5% over the rest of the year, activity data to drop further from March on weak momentum, and the property sector may deteriorate further. Some sectors, especially exports, may hold up relatively well on falling prices and robust external demand. In our view, Beijing will be forced to introduce more forceful measures to address the property woes in coming months, especially regarding support for completing unfinished pre-sold homes. We believe markets will very likely interpret today’s numbers negatively, as the 5.3% Q1 growth could represent the peak this year, with headline growth likely deteriorating in coming quarters."

Goldman Sachs: "China's Q1 GDP growth came in stronger than our above-consensus forecast, while March activity data delivered a mixed bag. Industrial production growth slowed meaningfully in March and missed expectations, led mainly by slower output growth in computer & other electronics industries. Year-on-year growth in retail sales and services industry output both slowed in March, but the latter held up relatively better. Fixed asset investment growth accelerated in March and beat expectations, thanks to faster manufacturing and infrastructure investment growth. China's sequential growth momentum was robust in Q1 on manufacturing strength and consumption resilience, and the impact of policy easing is gradually kicking in, although property weakness is likely to be prolonged. We maintain our sequential GDP growth forecasts for the coming quarters. Onboarding the Q1 GDP outturn and NBS revisions to 2023 sequential growth estimates, our 2024-25 full-year GDP growth forecasts remain intact at 5.0% and 4.2%, respectively. On the policy front, although the "around 5%" growth target this year is on track, we believe continued policy easing is still necessary, especially on the demand side (e.g., fiscal, housing and consumption), to counteract long-term structural challenges."