Investment Stabilization to Warm Up? – October Data Preview

We believe the fragile investment-led stabilization could have remained on track while export growth could have reached another high in October. With easing efforts passing through, we do not expect an LPR cut this month following the PBoC re-anchoring of policy rates. The fragile investment-led cyclical stabilization we outlined earlier could have remained on track in October. Industrial production may have moderated to 5.3%YoY with a lower base from last year. Contraction of crude steel output at key plants narrowed to -3.4%YoY in the first 20 days of October, compared with -4.1%YoY in September, while momentum of the new economy should have stayed buoyant. Retail sales may have seen a small pullback to 1.0%YoY with Mid-Autumn Festival supporting September numbers this year. Auto sales showed little signs of improving, with sales volume projected at -28.9%YoY. Investment stabilization could extend: we expect monthly FAI to inch back to around zero with a lower base from last year and