China's Manufacturing Capacity - Seven global manufacturing industries represent 22% of China's GDP growth[2] - Over 50% of capacity in five sectors operates at zero or negative cash margins[2] - Solar and lithium batteries are closest to reaching a supply/demand inflection point, while electric vehicles and power semiconductors are the furthest[2] Investment Ratings and Relationships - Goldman Sachs has investment ratings on 2,925 equity securities as of July 1, 2024[8] - 48% of ratings are Buy, 35% are Hold, and 17% are Sell[10] - 64% of Buy-rated companies have investment banking relationships with Goldman Sachs, compared to 57% for Hold and 41% for Sell[10] Research and Disclosures - Goldman Sachs' Quantum database provides detailed financial statement histories and forecasts for in-depth analysis[7] - Analysts certify that their views are personal and not influenced by compensation[4] - Research reports are based on public information and are subject to change without prior notification[17]

Economic Overview - Economic activity continues to expand at a solid pace, with job gains moderating and the unemployment rate increasing but remaining low[1] - Inflation has eased over the past year but remains elevated, with progress toward the Committee's 2 percent inflation objective noted[1] Monetary Policy Decisions - The Federal Reserve maintains the target range for the federal funds rate at 5-1/4 to 5-1/2 percent, with no expected reductions until inflation shows sustainable movement toward 2 percent[2] - The interest rate paid on reserve balances is set at 5.4 percent, effective August 1, 2024[4] Open Market Operations - Open market operations will be conducted to maintain the federal funds rate within the target range, with standing overnight repurchase agreement operations at a minimum bid rate of 5.5 percent and an aggregate operation limit of $500 billion[4] - The Federal Reserve will roll over principal payments from Treasury securities maturing in excess of $25 billion per month and reinvest agency debt and mortgage-backed securities payments exceeding $35 billion per month into Treasury securities[4] Committee's Commitment - The Committee is committed to returning inflation to its 2 percent objective and will monitor a wide range of information, including labor market conditions and inflation expectations, to assess monetary policy stance[3]

Economic Growth - China's GDP growth is expected to decelerate to 4.9% in 2024, down from previous forecasts due to weaker domestic demand and a slowdown in the services sector[1][46]. - In Q2 2024, GDP growth slowed to 4.7% YoY from 5.3% in Q1, marking the lowest sequential growth since Q4 2022[1][46]. Sector Performance - The services sector's growth slowed to 4.2% in Q2, primarily due to a deteriorating property market and reduced government spending[1][4]. - The industrial sector maintained a growth rate of 5.6% in Q2, supported by strong exports[1][4]. Household Income and Spending - Household income growth decreased to 4.5% in Q2 2024 from 6.2% in Q1 and 6.3% in 2023, leading to reduced household spending on essentials[1][6]. - Consumer inflation has turned positive but remains subdued, with expectations of gradual improvement to 0.9% by the end of 2024[1][48]. Fiscal Policy and Government Spending - Total fiscal spending shrank by 2% YoY in the first five months of 2024, indicating a downward trend in government expenditure[1][24]. - A budget revision may be necessary in H2 2024 to achieve the 5% annual growth target amid declining local government revenues[1][48]. Trade and Exports - Exports are projected to remain a bright spot, with growth driven by increasing demand from emerging markets, which saw exports to EMDEs nearly double from 2018 to 2023[1][108]. - The impact of new US and EU tariffs on Chinese exports is expected to be minimal, affecting only about 0.5% of total exports[1][123]. Monetary Policy - The People's Bank of China (PBoC) is expected to implement a modest rate cut of 10bps by the end of 2024, facing constraints from the need to maintain currency stability[1][56]. - The PBoC's focus on exchange rate stability limits the scope for aggressive monetary easing, despite the need for support amid low inflation and softening credit demand[1][116]. Investment Trends - There has been a notable increase in Panda bond issuance, with a total of RMB 45 billion issued between January and May 2024, driven by low lending costs[1][304]. - The net issuance of Dim Sum bonds has also increased significantly, reflecting the favorable interest rate differential and the need for onshore enterprises to access cheaper USD funding[1][330].

Economic Activity - Economic activity maintained a slight to modest pace of growth across most Federal Reserve Districts, with seven Districts reporting increases and five noting flat or declining activity[25] - Consumer spending showed little change, with reports of price-sensitive consumers purchasing fewer items and retailers discounting products[16] - Residential real estate activity increased due to improved supply, while commercial real estate remained flat amid concerns about office leasing[28] Labor Markets - Employment rose slightly overall, with most Districts reporting flat or modest growth, although some sectors, particularly manufacturing, experienced declines[26] - Wage growth continued at a moderate pace, but several Districts noted a slowdown in wage increases due to increased worker availability and reduced competition[26] - Labor turnover decreased, leading to less demand for new hires, with firms becoming more selective in hiring practices[26] Prices and Inflation - Prices increased at a modest pace, with input costs stabilizing in most Districts, although some areas reported notable increases in specific commodities like copper[16] - Selling prices continued to rise modestly, but consumers pushed back against high prices by purchasing less or opting for lower-priced alternatives[42] - Overall, inflation pressures remained moderate, with some sectors experiencing price competition as consumers sought lower prices[100] Consumer Behavior - Retailers reported slight decreases in real sales, with many consumers becoming more price-conscious and opting for discounts[34] - Auto sales varied across Districts, with some declines attributed to a cyberattack on dealerships and high interest rates affecting affordability[35] - Tourism activity remained steady, with pockets of growth in certain areas, although price sensitivity among tourists dampened sales in hospitality[37] Outlook - Expectations for economic growth over the next six months are cautious, influenced by uncertainties related to the upcoming election, domestic policy, and inflation[25] - Contacts across various sectors expressed concerns about future demand, particularly in manufacturing and commercial real estate, with some anticipating declines[28]

Perspective from | --- | --- | --- | --- | --- | |-------------------|-------|-----------------------------------------------------------------------------------------------------------|-------|----------------------------------------------------------------------------------------------------| | | | | | | | July 2024 | | | | | | | | | | | | Table of contents | | 2 Macroeconomic outlook Sailing through uncharted waters Paul Mielczarski 5 Developed markets fixed income | 9 | High yield credit outlook Positiv ...

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Will the rebound in Chinese stocks continue? China registered better-than-expected GDP growth figures in the first quarter of 2024. What's your take on that data? Within this context, how do you view stock earnings and valuations? Client Login Published on 11 JUL 2024 Topic: CHINA GDP growth has undoubtedly fared better than expected for China in the first quarter. China met its areas that have been promising include fixed asset investment – driven by faster manufacturing and Client Login sector recovery ha ...

2* Cash flow, in general, refers to payments made into or out of a business, project, or financial product. It also may refer to the real or virtual movement of money. 4* Consumer Price Index. The Consumer Price Index measures the overall change in consumer prices based on a representative basket of goods and services over time. 6* The Magnificent Six or "Mag 6" stocks are a group of high-performing and influential companies in the US stock market: Alphabet, Amazon, Apple, Meta Platforms, Microsoft and NVID ...

Economic Overview - The federal funds rate target range is maintained at 5.25% to 5.50%, reflecting a balance of risks to employment and inflation[3] - The unemployment rate was at a historically low level of 4.0% in May 2024, with significant employment gains across various sectors[43] - Real GDP growth moderated in the first quarter of 2024, primarily due to declines in net exports and inventory investment[58] Inflation Trends - The 12-month change in housing services prices decreased from over 8% in May 2023 to 5.5% in May 2024, indicating easing inflation[35] - Core goods prices saw a decline of 1.1% over the 12 months ending in May 2024, reflecting improvements in supply-demand imbalances[14] - The PCE price index for food prices slowed from a peak of 12.2% in August 2022 to just 1.2% in May 2024[13] Labor Market Dynamics - Payroll employment gains averaged 248,000 per month in the first five months of 2024, with over 60% of industries expanding their employment[68] - Nominal wage growth remains above levels consistent with 2% inflation, although it has slowed recently[56] - Employment disparities across demographic groups have narrowed, but significant gaps remain, particularly for prime-age women and minority groups[52] Financial Stability - The financial system is reported to be sound, with the credit-to-GDP ratio near a two-decade low, although vulnerabilities are emerging in asset markets and commercial real estate[58] - Delinquency rates for small business loans and credit cards have increased, indicating potential stress in the financial sector[58]

June 23, 2024 08:02 PM GMT Contrary to market concerns, our analysis shows still healthy growth in household financial assets, income and consumption amid de-risking efforts in China. However, some structural changes in allocation of income growth and over competition among goods and service providers could be concerns. Payment and job applications data shows consumption downgrade in first-tier cities and upgrade in rural/lower-tier cities. Job application and employment data showed a notable shift from int ...