Economics Activity highlights in China - Month of March 2020
Chinese firms recorded 66 venture capital deals for the week ended March 28, the most of any week in 2020 and just below figures from the same time last year. (Pitchbook data)
Monetary measures played an important role in epidemic relief and stabilizing demand. These policies should pick up credit growth as business activities in China normalize. (i.e., people's bank of china to lower its reserve requirement ratio for small banks by 1pp)
Most of the factories' workers are back to their duties. This is primarily driven by a surge in PPE orders overseas (EU and US) and is confirmed by the new PMI number (employment rose to 50.9 from 31.8, as more people return to work).
There is increased foot traffic in retail stores and malls(as people gradually return to the public), as well as increased demand in tech-driven services and products.
However, there are temporary layoffs across cyclical industries, as companies are anticipating fewer new orders from repeat customers, as well as a potential sharp drop of external demand amid overseas shutdowns.
In summary, telehealth, tele-education, e-commerce, and visualized communication are immediate beneficiaries, while other traditional sectors, such as energy, leisure, and consumer retail, provide distressed M&A and LBO opportunities.
