China’s economy registered 9.1% of growth in Q3 on a year-on-year basis, the slowest pace since 2009, as the government continued tightening the monetary policy in the face of heightened inflation. Trade surplus narrowed for a second straight month in September to $14 5 billion as both export and growth slowed to 17.1% and 20.9% YOY in September. Consumer sentiment remained optimistic despite a slight dip in the Consumer Confidence Index. Business sentiment, while upbeat, became more cautious: the business climate index fell to 133.4 in Q3 while the Purchasing Managers’ Index remained below its long term average. Pricing pressure moderated slightly but remained elevated in September with the Consumer Price Index edging down to 6.1%. Expectation of stock market volatility shot up with the AlphaShares Chinese Volatility Index more than doubling since July to reach 47.5 in September, the highest level since the Lehman crisis. Other highlights include:
– The SSE composite index lost 2.7% in the last 30 days
– The three month SHIBOR rate remained virtually unchanged at 5.62% in the last 30 days
– Year on year growth in Money supply continued to slow down, registering 13.0% in September.
Country risk, as measure by the credit default spread on its sovereign debts shot up to 200 bps on October 3rd before retreating to 139.4 bps on October 17th.