Osaka Financial reported that China’s trade surplus widened and its export sector recovered last month, soothing investor fears that its economy is heading for a so-called “hard landing. The country’s weakening currency, the yuan, which has shaken global markets this year recovered slightly on the news.

China’s trade balance expanded to $60 billion helping compensate for capital outflows that have exerted downward pressure on the yuan upsetting markets and prompting a sharp selloff in equities on the countries two main indexes in the first two weeks of the new year.

“Confidence in the economy was struggling to gain traction particularly after it posted its lowest rate of economic growth in 25 years. This news on exports has been well-received but it may be a temporary blip with roots in seasonal factors,” said Satoshi Mihuko, chief economist at Osaka Financial.

China’s equity markets have been volatile since the middle of June last year following a huge run up in stock values that saw the Shenzhen and Shanghai Composites enjoy triple digit gains over a 12-month period. The People’s Bank of China, the country’s central bank, has moved on several occasions to cut interest rates and tweak bank-lending rules in a bid to arrest the pace of decline in economic growth.

"They wanted to engineer a soft landing but things may have gotten away from them," said Mihuko. “Nevertheless, there is a school of thought to which Osaka Financial subscribes that believes the rout in stocks seen so far this year has more to do with regulatory issues governing the country’s exchanges than it does with any intrinsic weakness in the Chinese economy,” concluded Mihuko.

About Osaka Financial
Established in 2007, Osaka Financial is a fully-independent investment and asset management practice providing bespoke financial and wealth management solutions to individuals and families who need to build upon and conserve their wealth. We provide a comprehensive range of services including asset management, retirement planning and portfolio design.

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