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29 Apr 2013
Forex Flash: China saw exceptionally strong net capital inflows in Q1 - Nomura
FXstreet.com (Barcelona) - Nomura economists note that China saw exceptionally strong net capital inflows in Q1, though these may not be sustainable as they expect growth to slow beyond Q1.
They note that the State Administration of Foreign Exchange (SAFE) released preliminary Q1 2013 balance of payment (BOP) data. Further the BOP surplus rose to USD157bn from USD34.2bn in Q4 2012. Also, the current account surplus widened slightly to USD55.2bn in Q1 from USD45.1bn in Q4 2012. The interesting data point they see is the capital and financial account, which swung sharply into a surplus of USD101.8bn in Q1 2013 after large deficits from Q2 to Q4 2012. Net FDI inflows narrowed to USD29.4bn from USD62.6bn in Q4 2012, while non-FDI capital inflows surged to USD72.4bn, almost reversing net capital outflows in Q4 of USD73.5bn. They believe that non-FDI capital inflows are at least partly related to the growth recovery and asset price rebound in equity and housing markets. They write, “As we expect growth to trend lower beyond Q1, unusually strong capital inflows may not be sustainable.”
They note that the State Administration of Foreign Exchange (SAFE) released preliminary Q1 2013 balance of payment (BOP) data. Further the BOP surplus rose to USD157bn from USD34.2bn in Q4 2012. Also, the current account surplus widened slightly to USD55.2bn in Q1 from USD45.1bn in Q4 2012. The interesting data point they see is the capital and financial account, which swung sharply into a surplus of USD101.8bn in Q1 2013 after large deficits from Q2 to Q4 2012. Net FDI inflows narrowed to USD29.4bn from USD62.6bn in Q4 2012, while non-FDI capital inflows surged to USD72.4bn, almost reversing net capital outflows in Q4 of USD73.5bn. They believe that non-FDI capital inflows are at least partly related to the growth recovery and asset price rebound in equity and housing markets. They write, “As we expect growth to trend lower beyond Q1, unusually strong capital inflows may not be sustainable.”