China: Real activity rebounds after holiday disruption – Standard Chartered

Hunter Chan, economist at Standard Chartered, points out that their China’s March SMEI survey indicates a significant improvement in SME performance.

Key Quotes

“The headline SMEI (Bloomberg: SCCNSMEI <index>) – based on our monthly survey of more than 500 SMEs nationwide – reached 57.1 in March, the highest level since May 2018.”

“The ‘current performance’ sub-index rebounded sharply in March, normalising after the holiday disruption. However, the reading still edged down on average in Q1 from Q4, pointing to weaker real activity in the first quarter of the year.”

“On the other hand, the ‘expectations’ sub-index stayed above 60 for the second month, suggesting a better outlook for SMEs compared to Q4-2018.”

“SMEs’ credit conditions continued to improve in March on policy support. Banks’ willingness to lend to SMEs reached a record high, reflecting the impact of authorities’ efforts to direct financial resources to SMEs. Borrowing costs from banks remained stable but that from non-banks increased.”