BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Refer to important disclosures on page 5 to 6. 12639606 China Watch Chart book series #125: Industrial profit picked up; deposit rate cut again in Dec Mobility improved; consumption still held up Both inter- and intra-city mobility remained intact this week. Daily subway rides rebounded, especially for Tier 2&3 cities (Exhibit 3). The number of domestic flights also rebounded (Exhibit 4). International flights also recovered to about 62% of the pre-Covid level (Exhibit 5). Box office revenue improved sequentially (Exhibit 7), while auto sales rose by 11% yoy in Dec 18-24, according to the CPCA (Exhibit 6). Industrial profit picked up for the 4th consecutive month Both industrial enterprises’ revenue and profit picked up further in Nov (at 7.2% and 29.2%, respectively, Exhibit 1). The upstream and downstream industries saw the most gain in profits (Exhibit 8). That said, the growth of inventory for finished goods edged down again (1.7% yoy, vs. 2.0% previously, Exhibit 9), suggesting enterprises are still cautious in restocking ahead of new year. Container freight index picked up after the red sea incident (Exhibit 12). New home sales picked up after policy easing New home sales in key cities rebounded and surpassed 2022 level this week (Exhibit 14). We see Tier 1&2 cities contributed to most of the recovery, likely due to the recent policy easing measures for home purchasing requirement. Secondary home sales in the 10 major cities also remained stable (Exhibit 15). However, land market remained quiet, as land auction price premium remained low at around 3% last week (Exhibit 16). Deposit rate cut again in Dec; liquidity tightened slightly Deposit rate cut again by 10-25bps across tenors for major commercial banks, the 3rd time in 2023. The 10-year CGB yield also inched down further. Market liquidity tightened slightly ahead of the year-end, as 7d repo rate edged up (Exhibit 17). Dollar index fell further this week, while USDCNY stabilized at below 7.15 (Exhibit 18). Exhibit 1: Industrial enterprises’ revenues and profits Both industrial revenue and profit growth picked up further in Nov Source: BofA Global Research, NBS, CEIC BofA GLOBAL RESEARCH -30-20-100102030Aug-22Nov-22Feb-23May-23Aug-23Nov-23% yoy Revenue Profit28 December 2023 GEM Economics Asia | China Benson Wu China & Korea Economist Merrill Lynch (Hong Kong) +852 3508 5047 benson.wu@bofa.com Helen Qiao China & Asia Economist Merrill Lynch (Hong Kong) +852 3508 3961 helen.qiao@bofa.com Abbreviations: CPCA: China Passenger Car Association NDRC: Natio...
