Navigation Search

Select your location and role to view strategy and fund content

South Africa
  • Global homepage
  • Australia
  • Belgique
  • Botswana
  • Denmark
  • Deutschland
  • España
  • Finland (Suomi)
  • France
  • Hong Kong (香港)
  • Ireland
  • Italia
  • Luxembourg
  • Namibia
  • Nederland
  • Norway
  • Österreich
  • Portugal
  • Singapore
  • South Africa
  • Sweden (Sverige)
  • Switzerland
  • United Kingdom
  • United States
  • International
Professional Investor
  • Professional Investor
  • Individual Investor

Tailored for investment professionals this site provides information on our products, strategies and services. Please remember capital is at risk and past performance is not a guide to the future. We use cookies to ensure that we give you the best experience on our website. This includes cookies from third parties. Such third party cookies may track your use of our website. By continuing you are confirming that you are happy to receive all cookies on our website. Please refer to our Cookie Policy for further information, including steps to take to disable cookies.

By entering you agree to our Terms & Conditions

Disconnecting investment indicators

China fixed asset investment (excluding rural households) cumulative YoY, 2000-2015


Source: Bloomberg


China property sales vs new starts cumulative YoY, 2011-2015

Source: Bloomberg


The health of China’s builders is an important indicator of on-the-ground activity. But the signals are mixed. “Although traditional leading indicators of construction like housing sales and new fixed-asset investment (FAI) projects have turned up, the actual measures of activity continue to move lower,” says Mike Hugman, strategist in Emerging Market Fixed Income. “Based on historical relationships the lags should have cleared and there should now be more activity. If the lags are getting longer and activity picks up this quarter, it could be a multi-quarter growth relief rally.” But he warns that if those leading indicators have disconnected from final activity the situation might be more bearish.

“The question is are we stuck in a liquidity trap of sorts, where a combination of balance sheet overhangs, excess commercial property inventory and public-sector finance blockages are preventing the usual sequence of credit-driven activity rebound?” 

Watching out for the continuing disconnect or realignment between FAI starts and real activity will be key over the next quarter.

The content of this page is intended for investment professionals only and should not be relied upon by anyone else

Please confirm you fall under this category

By entering you agree to our Terms & Conditions