By Michael Kitchen, MarketWatch
LOS ANGELES (MarketWatch) — Chinese economic data released Monday, including first-quarter growth, came in weaker than expected, sending stocks lower across Asia, even as some analysts predicted a better numbers ahead.
Gross domestic product for the January-March quarter rose 7.7% from a year earlier, the National Bureau of Statistics said, weakening from 7.9% growth in the fourth quarter, and missing projections for 8% growth in separate surveys from Dow Jones Newswires and Reuters.
Among the March data, industrial production increased 8.9% from the year-earlier period, well below the Dow Jones Newswires forecast for a 10% gain.
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The growth was the weakest in more than a year, slowing from a 9.9% average rise for the January-February period, which China’s statistics bureau reports as one figure due to seasonal distortions from the Lunar New Year holiday.
Kim Eng Securities strategist Andrew Sullivan said the numbers were disappointing, but cited global factors and the official change in China’s leadership during the quarter.
“The slowdown in GDP should maybe be expected from the global slowdown and the fact that we haven’t seen the new government pull the trigger on major spending. I still [think] those will come in the second half [of 2013], once the government has established itself,” he wrote following the data release.
Bank of America Merrill Lynch’s head China economist Ting Lu also offered an upbeat outlook.
“Markets will surely get disappointed by these poor readings, but we believe growth could slightly rebound in second quarter on regained confidence and supportive policies,” he said.
Still, the optimism was far from unanimous. IHS China economists Alistair Thornton and Xianfang Ren said the fact that industrial-production growth had fallen to the same level as in August 2012, “when hard-landing fears were at their zenith,” illustrated the overall weakness.
“Indeed, 2013 is starting to look eerily like 2012: Last year, a ramp-up in economic activity through the first few months proved short-lived, precipitating a mid-year slump and an aggressive policy response,” they wrote in a note to clients.
“Unfortunately, the cost of repeating this strategy looks to be prohibitively high. Another year of propped-up growth via state spending and a credit deluge would, we fear, push China dangerously close to proving [former Premier] Wen Jiabao correct — that the current economic model is ‘unsustainable,’” they wrote.
Other data also weak
March retail sales rose 12.6%, improving from 12.3% year-on-year growth in the January-February period, but far less than the 15.2% gain in December.
Results for urban fixed-asset investment (FAI) — a gauge of construction and infrastructure spending — also showed slower growth. Reported on a year-to-date basis, FAI rose 20.9% in January-March from the comparable year-earlier period, down from 21.2% in January-February alone. Still, for all of 2012, FAI gained 20.6%, suggesting an uptick in recent construction activity.
Stock markets across Asia traded markedly lower after the data, with Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.46% down 1.5%, while Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -0.73% lost 1.4%, and Japan’s Nikkei Average /zigman2/quotes/210597971/delayed JP:NIK -1.15% fell 1.6%.
Action was more volatile for the Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 +0.68% which traded 0.9% lower, edging back from slightly heavier losses right after the data.
Australia, which counts China as its top trading partner, saw its dollar /zigman2/quotes/210560947/realtime/sampled AUDUSD +0.0951% drop to $1.043 from $1.050 just ahead of the release, while the Japanese yen rose, with the dollar /zigman2/quotes/210561789/realtime/sampled USDJPY +0.0100% falling to ¥97.73 from ¥98.46.
Oil futures also suffered after the data, with the market already weighed by worries about slower global demand for the commodity.
Benchmark U.S. may crude-oil futures /zigman2/quotes/209724777/delayed CLK23 -0.41% extended their losses, falling $1.74, or 1.9%, to $89.53 a barrel in electronic trading. Just ahead of the data, they were down 1% at $90.38.