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Last Update: 07-Aug-18 11:54 ET
Looking Ahead - August 8, 2018 - China Trade Balance (FXI)
Global trade will be back in focus on Wednesday after China reports its trade balance for July. The question is, will that report help, or hurt, the market's perspective regarding the potential for trade wars?
China's Trade Balance Report for July (Tuesday, August 7, at 11:00 p.m. ET)
- Why it's important
- China's trade balance report provides insight on its export and import activity, which is important for the global economic outlook.
- Exports account for nearly a third of China's GDP.
- China is undergoing a deliberate transformation to become a consumer-led economy. Import data will help shape the market's thinking about its progress (or lack thereof) in making that transformation.
- This report will be a driver of policy stimulus expectations in China and elsewhere given the global preoccupation with China's economic growth rate.
- The report will carry a political spark given President Trump's rebuke of China for its unfair trade practices and increased rhetoric about the need to correct trade imbalances.
- The Trump Administration has imposed a 25% tariff on $34 bln worth of Chinese goods, will soon apply a 25% tariff on an additional $16 bln worth of goods, and recently said it will consider imposing a 25% tariff on a list of $200 bln worth of Chinese goods (up from an originally proposed 10% tariff) if China doesn't change its trade practices. China has said it will respond with countermeasures if the latter tariffs are implemented.
- The U.S. trade deficit with China increased $28.2 bln to $375.2 bln in 2017.
- China's trade balance report provides insight on its export and import activity, which is important for the global economic outlook.
- A closer look
- China had a trade surplus of $41.6 bln in June
- Exports increased 11.3% year/year in June after increasing 12.6% in May
- Imports increased 14.1% year/year in June, marking the twentieth straight month they have increased on a year/year basis.
- What's in play?
- China ETFs
- iShares China Large-Cap ETF (FXI)
- ProShares UltraShort FTSE China 50 (FXP)
- db X-trackers harvest CSI 300 China A-Shares Fund (ASHR)
- iShares MSCI China ETF (MCHI)
- SPDR S&P China ETF (GXC)
- China Small Cap ETF (HAO)
- Market Vectors China ETF (PEK)
- Regional ETFs
- iShares MSCI Emerging Markets (EEM)
- SPDR S&P Emerging Asia Pacific ETF (GMF)
- iShares MSCI Japan (EWJ)
- iShares MSCI South Korea Capped ETF (EWY)
- iShares MSCI Singapore (EWS)
- iShares MSCI Australia ETF (EWA)
- iShares MSCI Taiwan ETF (EWT)
- Currencies
- USD/CNY
- USD/JPY
- EUR/USD
- Commodities
- Treasuries (TBT, TLT, SHY, SCHO)
- S&P futures
- China ETFs
