Finimize - 👀 Bye China, hello India

What’s going on here?

China’s latest economic update was full of mixed signals, so fed-up investors have started checking out a fresh suiter.

What does this mean?

China’s industrial sector clawed a bit of a comeback last month, churning out a better-than-expected 6.6% more products than the same time a year ago. But retail sales – which shed light on the population’s spending habits and financial confidence – were slower than hoped versus last year’s figures. What’s more, last year’s Covid-impacted sales mean even this tiny uptick may be less promising than it looks. Those limp sales mean there’s little cash swirling around the economy, which won’t be helped by investment in the property market dropping over 9% since January this year. After all, the state of the market influences house prices which, in turn, shapes how secure folk feel financially.

Why should I care?

For markets: China can’t win for losing.

The Chinese central bank isn’t waiting for the country to fix itself, mind you. By announcing a record injection of cash on Friday, the bank’s hoping to bolster the economy against the pressure of a falling housing market. The wad of cash is twice as much as analysts expected, and a lot heartier than last month’s helping hand. But the central bank needs to strike a delicate balance: the country’s already falling into deflation, and if freshly funded firms manage to pump out more stock, prices will only continue their descent.

The bigger picture: The world’s next superpower.

Investors are fickle folk: they’ve already looked past China to lock eyes with India, touting its thundering economy as the star of emerging markets. In fairness, the National Stock Exchange of India did recently become the world's seventh-biggest stock market after almost doubling since 2020. And just like China’s early days, India is investing heavily in its own infrastructure and internal projects, all funding the ambitious goal of being a developed economy by 2047.

What’s going on here?

The number of electric vehicles (EVs) stuck in US dealers’ lots hit a new high.

What does this mean?

EVs only become eco-friendly once they’ve been driven some distance. So right now, we’re far from green. Almost twice as many EVs were stuck in dealers’ garages at the start of December compared to the same time last year, excluding straight-to-driver sellers Tesla and Rivian. That’s partly because US drivers are balking at EVs’ spotty charging infrastructure and sputtering driving range when the weather’s too hot or cold. Any buyer still in the market has to scrape together a ton of cash to buy one, too – a hard task in this economy. But it’s also because carmakers are pumping out new models faster than they can sell them, so much so that dealers asked the US president to relax pro-EV mandates last month to ease their heaving inventories. That may be needed: Bloomberg now expects drivers to buy roughly 775,000 fewer EVs next year than it predicted in June.

Why should I care?

For markets: If it sounds too good to be true…

The aptly named KARS exchange-traded fund (ETF) has fallen halfway from its 2021 peak, while the broader DRIV ETF is sitting nearly a quarter behind its own highpoint. Now it’s true, high interest rates, China’s slowdown, and tense geopolitical landscapes may have hurt the sector. But with carmakers falling behind the lofty expectations set a couple of years ago, you can’t blame investors for becoming disillusioned.

The bigger picture: Buckle your seatbelts.

Market leaders Tesla, General Motors, and Ford are spending money with a more cautious hand now, waiting for hints on buyer demand before putting more cars on the production line. These days, they can’t afford to waste a dollar: carmakers will likely be forced to slash prices to attract would-be buyers, but with costs showing no sign of deflating, that’ll take a toll on profit margins.