Bo Zhuang, chief China economist at research firm TS Lombard, said that the trade war has had a “mixed impact” on inventories, with Chinese tech firms having to hold large stockpiles and other industries drawing down their inventories, which could affect the results at Chinese firms.
“Given our negative outlook on industrial prices, the unsustainability of a prolonged build-up in tech inventories and the undiminished threat of future tariffs, we expect inventory liquidation over [the second half of 2019], which will in turn weigh on industrial activity,” Zhuang said. “With domestic and external demand tepid, and the risk of further tariff hikes still looming, producers will continue to draw down inventory, keeping production and orders for raw materials in maintenance mode.”
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