CICC: How to track the impact of Xinguan epidemic on overseas economy?

CICC: How to track the impact of Xinguan epidemic on overseas economy?

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  Source: CICC’s new crown pneumonia epidemic situation is still being deduced. According to our preliminary judgment on the rhythm of the epidemic and its impact on China’s economy[1], we expect its impact on overseas economies will be concentrated in one quarter and emerging markets will be affected.

Of course, there is still a high degree of uncertainty in the duration of the epidemic and the magnitude of its impact, which needs to be tracked in a timely manner.

This report sorts out relevant macro data and the agenda of the merger interest rate meeting to help investors better track and grasp the possible impact of the epidemic on overseas macroeconomics and policies.

  The epidemic affects overseas economies mainly through five channels1, which directly affects the income of overseas companies in China.

  The epidemic may affect the operations of some overseas companies in China, lower the overall income and cash flow of the parent company, and even affect their investment plans.

Focus on the globalized economies of multinational companies in China such as the United States, Europe, and Japan.

According to Factset statistics, the S & P 500 will have 12 constituent stocks in 2019.

Of the $ 3 trillion in revenue, 5.

8% are from China.

  2. Affecting China’s overseas demand.

  China’s global imports of goods accounted for 4% in 2002.

4% rose to 10 in 2018.

9%; travel expenditures rose from 15.4 billion US dollars in 2002 to 277.3 billion US dollars in 2018, ranking first in the world.

During the SARS period in the second quarter of 2003, China’s foreign travel expenditures declined by about 26% from the moving average trend of the past four quarters.

Follow Hong Kong, Thailand, South Korea, Japan, Singapore, South Africa, Saudi Arabia and other countries and regions.

  Chart: China, Taiwan, Vietnam, and other countries and regions are sensitive to changes in mainland China. Source: Haver Analytics, CICC Research3. The decrease in China’s parts supply may affect the global manufacturing industry chain.

  China’s manufacturing value-added accounted for 28% of the global total in 2018, and was deeply integrated with the global industry chain.

Emerging Asian economies such as Vietnam, Hong Kong, Thailand, Malaysia, and South Korea have relatively high dependence on mainland China, of which Vietnam’s manufacturing industry12.

4% of intermediate sponsorships come from China.

  Chart: Emerging Asian countries such as the Philippines and Vietnam rely heavily on China. Source: Haver Analytics, CICC Research: Chart: The proportion of global manufacturing interventions from China is relatively high.

In particular, emerging Asian countries, as well as global electronics, textiles and apparel industry sources: OECD, CICC Research 4, and falling commodity prices have impacted revenues in producing countries.

  Falling commodity prices have impacted incomes of producer countries such as Brazil, Russia, Australia, Chile, Peru and OPEC countries.

  5. Preventive measures taken by overseas countries / regions.

  The preventive measures adopted by overseas countries / regions must also curb their own domestic demand, especially the service industry, although it is not obvious so far.

  The impact on overseas economies may be mainly concentrated in the first quarter; emerging economies are hit by shocks. According to our judgment on the epidemic and its impact on the Chinese economy[1], the impact of the epidemic on overseas economies is more likely to be temporary and concentrated in the first quarter.

Developed markets such as the United States were less affected, while emerging markets were affected.

It is worth noting that once the epidemic is under control and the demand is restrained and released, the introduction of government fiscal and monetary policies will also start to repair the economy in the second quarter and partially hedge the first-quarter earnings effect.

In fact, we continue to believe that the momentum of overseas economic activity represented by the United States is still healthy, and the trend of growth and stabilization has only been temporarily postponed without being interrupted.

Of course, the duration and impact of the epidemic are still uncertain, and relevant data and response policies need to be carefully tracked.

  Three aspects of tracking the impact of the epidemic on overseas in a timely manner will be announced in the next few weeks in February. Please refer to the figure below for the data and step-by-step interest negotiation schedule for determining the impact of the epidemic. We will focus on three points: 1. Some developed markets will announce two in advance.Monthly PMI and other survey data.

  Starting from the third week of February (next week), overseas survey data will be released one after another. The data we remind investors to pay attention to includes: February 14th, Michigan consumer confidence announced in the United States; 18th and 20th, the United States announcedFed manufacturing surveys in New York and Philadelphia will provide early information on US manufacturing boycotts.

The preliminary February manufacturing PMI of G4 countries announced on the 21st can help investors further evaluate the impact of the epidemic on the development of manufacturing.

Unfortunately, these early survey data are dominated by developed markets and emerging markets have announced replacement.

  2, Japan and South Korea and other important Chinese trading partners in February import and export data.

  Of particular concern is South Korea ‘s export data for the first 20 days of February on the 21st.

These include export statistics by product and by region to better assess the degree of change in demand from China.

On the 27th, Japan will release import and export data for the first 10 days of February, which is also expected to provide some marginal information.The two hard data obtained from Chinese trading partners provide first-hand reference.

  3. Emerging markets have relaxed the pace of monetary policy in response to the “bumps in February.”

  The initial and timely easing of hedging downside risks is particularly important for emerging economies that have suffered.

Since February, Thailand, the Philippines, Brazil and Russia have cut their interest rates on a 北京夜网 large scale in response to the “February bumps” from the new crown epidemic.

In the subsequent weeks of February, South Korea, Indonesia, Mexico, Turkey, and so on will also gradually continue the deliberations.

We expect that these starting points will also cut interest rates to varying degrees to hedge downside risks.

However, for the developed markets of the United States, the Eurozone and Japan, we expect that it will address the downside risks brought by the epidemic situation, but will carefully observe before making a decision.

  图表:追踪疫情对海外宏观影响:数据及长期议事日历日历资料来源:彭博,中金公司研究部PPP转换GDP加权平均  资料来源:Bloomberg, 中金公司研究部  —–  [1] 参见Will the overall impact of China ‘s “New Crown” epidemic on growth, which will be released on February 2, 2020, exceed the SARS epidemic?

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  Article source This article is excerpted from: 杭州桑拿 How to track the impact of the new crown epidemic on overseas economies?

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