政治局会议前夕现企稳迹象？6月及二季度数据前瞻

SignsofStabilizationAheadofPolitburo?-Jun/Q2DataPreview June data is likely to showtentative stabilization,with exports leading +852-2501-2754xiangrong.yu@citi.com growthand retail salespotentiallyturningpositiveonacceleratingtrade-insubsidies.Likely soft investment and weak credit nonethelessreinforcethecaseforeasing-July'sLPRdecisionistheearliesttestpoint. +852-2501-2792xinyu.ji@citi.comYuanliu HuAc 4.5%YoYfor26Q2E,which couldmark thetroughfortheyear (see:China Outlook26H2:AlSupercycleCuts intotheK-shaped Economy).Monthly indicatorscouldshow signs of stabilization.Industrial production is likelyto hold steady at 4.6%YoYthanks to Al-centric exports and investment.Retail sales may turn positive atsubsidies.Dailyaverage subsidized sales quickened to ~RMB8.8bn inJun1-20comparedwith~RMB5.4bninJan-May(people.com,Jun22ndandJun20th).Investment remains a drag:we expect cumulative contraction in FAl to deepen to-4.5%YoYYtd,thoughthemonthlypaceofdeclinecould narrowto amid-singledigit.Thissetofdataisunlikelytoshiftthetoneofthemid-yearPolitburomeeting.Wecontinueto seeonlypiecemeal consumersupport,with JulyastheearliestwindowforanLPRcutfollowingthesurprisinglylowO/Nreversereporate. +852-2501-2746yuanliu.hu@citi.com Willexportscontinuetolead growth?-Weforecast China'sexportstostaystrongat18.0%YoYinJune,withimportsalsoelevatedat25.0%YoY,leavingthetradesurplus at ~USs119.5bn.Exportmomentum is likelyto remainsolid,supported byeasing Middle Easttensions andtheongoingglobal Alsupercycle.This is consistentwith the rebound in June PMI new export orders and improving high-frequencyvolumedata,with cargo throughput up1.3%YoYin the firstfourweeks of June.Forimports,robust Al-related demand is the keytailwind, evidenced by South Korea'sexportstoChinarising92.1%YoYin June.However,softercommodityprices maypartiallyoffset headline importgrowth Disinflationafteroilshock?-WepencilinJuneCPlat1.1%YoYandPPlat4.3%YoY.The oil shock appears largely behind us, with price-related PMl indices moderatingand Brent down-20.2%MoM.Yet wetend not to overestimatethe downside risk:coal prices extended their rise into June and could have broader spillover effectsthan oil &gas.Al inflation may also surface further in PPl. On CPl, the picture is littlechanged-food pricesare tracking broadlyin line withseasonality(pork-1.9%MoM,vegetables +2.0%MoM, fruit -3.2%MoM), while oil and gold prices weighing on theheadline,partlyoffset by firmertravel prices around Dragon BoatFestivaland intothe summer season. Thereturnofmonetaryeasing??-Newcreditdatalookssettodisappointagainwiththe PBoC'sthird consecutivewindowguidance(Reuters,Jun 26th)and subduedbillsdiscount rates throughout the month.We expect new RMB loans atRMB1,80Obn(vs.RMB2,24Obnlast June)andnewTotalSocial Financing atRMB3,500bn(vs.RMB4,225bn),withgovernmentbondissuance(~RMB800bn)andcorporatebondfinancing(~RMB5oObn)providingthemainsupporttothelatter.Monetary growth is also likely to retreat as a higher base kicks in. We expect M1growth at 3.5%YoYandM2at 8.1%YoY.Together,this reinforces the caseforfurthermonetaryeasing,withJuly's LPRdecisionakeytestpointtowatch. SeeAppendixA-1forAnalystCertification,ImportantDisclosuresandResearchAnalystAffiliations. of the graphics in this document, please call USA 1-888-500-5008 (TTY: 711), from outside theUS+1-210-677-3788 Appendix A-1 Theresearchanalystsprimarily responsibleforthepreparation andcontentofthis research reportareeither(i)designated analystsaredesignatedintheauthorblock,eachanalystiscertifyingwithrespecttotheentireresearchreportotherthan(a)contentattributabletoanotherACcertifyinganalystlisted inboldalongsidethecontentand(b)viewsexpressedsolelyratinghistorytablesforthatissuershownbelow.Eachoftheseanalysts certify,withrespecttothesectionsofthereportforwhichtheyareresponsible:(1)thattheviewsexpressedthereinaccuratelyreflecttheirpersonalviewsabouteachissuerandsecurityreferencedandwereprepared inanindependentmanner,includingwithrespecttoCitigroup GlobalMarketsInc.and its affiliates;and (2)nopartoftheresearchanalyst'scompensationwas,is,orwill be,directlyorindirectly,relatedtothespecificrecommendations orviewsexpressedbythatresearchanalystinthisreport.IMPORTANTDISCLOSURES Analysts'compensation is determined by Citi Researchmanagement and Citigroup's senior management and is basedupon activities and services intended tobenefit theinvestorclients of CitigroupGlobal MarketsInc.and its affiliates (the“Firm").Compensationisnotlinkedtospecifictransactionsorrecommendations.LikeallFirmemployees,analystsreceivecompensationthatisimpactedbyoverall Firmprofitabilitywhichincludes investmentbanking,salesandtrading,andprincipaltradingrevenues.Onefactorin equity research analystcompensation isarranging corporate access eventsbetweenparticipatewhentheanalysthasapositiveviewofthecompany.Forfinancial instruments recommended in the Product in which the Firm is not a marketmaker,the Firm isa liquidityprovider in suchfinancialinstruments(and anyunderlying instruments)andm