BEIJING – China’s export growth likely slowed in March as the Ukraine war inhibited global demand, while imports probably eased amid signs that widespread anti-COVID lockdowns have weakened domestic consumption, a Reuters poll showed on Tuesday.

Exports likely rose 13% in March versus a year earlier, compared with 16.3% year-on-year growth for the January-February period, according to a median forecast in a Reuters poll of 19 economists.

Imports in March were estimated as 8% higher than a year before, the poll showed, easing from 15.5% growth seen in the first two months of the year. The slowdown in growth was partly driven by sluggish domestic demand and by production disruptions, both caused by ongoing COVID-19 outbreaks, analysts say.

Chinese economic data for January and February is often combined to remove distortions caused by the shifting timing of the Lunar New Year holiday.

Economists in the poll expect a March trade surplus of $22.4 billion, compared with $13.8 billion a year earlier.

The trade data will be released on Wednesday.

While COVID outbreaks and resulting restrictions in such major manufacturing locations as Jiangsu, Guangdong and Shanghai have probably slowed export growth, the Ukraine war is denting global economic recovery and disrupting logistics, analysts say.

The Caixin manufacturing Purchasing Managers’ Index, which focuses on small manufacturing firms in coastal regions, indicated contraction in March, with a sub-index of new export orders dropping to a 22-month low.

Container throughput at eight major Chinese ports grew 1.8% year-on-year in March, slower than February’s 2.8% growth, data by the domestic port association showed.

China’s efforts to curb its largest COVID-19 outbreaks in the two years have restricted activity in several cities and in March forced companies from Apple supplier Foxconn to automakers Toyota and Volkswagen to suspend some operations.

Nomura said in a note that China, the world’s largest manufacturer, had been facing a rising risk of recession since mid-March. It added that, as of Monday, 45 cities had implemented either full or partial lockdowns covering 26.4% of China’s population and 40.3% of its GDP.

Amid constrained supply, factory-gate inflation rose faster than expected in March, raising questions among some analysts about just how much the central bank will be able to ease monetary policy.

Some analysts, noting economic headwinds from the pandemic, still expect further policy easing. But ANZ Research analysts said in a note on Tuesday that the only viable way to boost the economy was to relax measures that hold down the real estate sector.

(Reporting by Ellen Zhang, Stella Qiu and Ryan Woo; Editing by Bradley Perrett)

HONG KONG -China is encouraging long-term investors to buy more equities and major shareholders of listed firms to increase their holdings when stocks slump, in a bid to stabilise a stock market rocked by a worsening COVID-19 outbreak.

The government will also facilitate corporate financing in COVID-hit areas and urge state shareholders of listed firms to actively buy undervalued stocks, the country’s securities watchdog said in a statement on its website late on Monday.

China’s benchmark CSI300 index fell 3.1% on Monday, the biggest drop in a month, as a lockdown in Shanghai and other parts of the country threatens economic growth.

The market dipped further on Tuesday morning to a near four-week low, bringing this year’s loss to 17%, as investors appeared unmoved by the authorities’ gesture.

Yuan Yuwei, hedge fund manager at Water Wisdom Asset Management, said mobilising capital, especially public money, into Chinese stocks now doesn’t make sense.

“There remain lots of structural bubbles and risks in this market, which also faces huge external uncertainty,” he said, citing capital outflow risk, fallout from the Ukraine crisis, and rising geo-political tensions.

The China Securities Regulatory Commission (CSRC) said in Monday’s statement that authorities will take steps to stabilise expectations of listed companies and investors.

China will encourage social security funds, pension funds, insurers, trust firms and wealth management firms to allocate more money to equity assets, and invest more in quality listed companies, the CSRC added.

The government will also improve the financing mechanism for private companies, and support corporate fundraising, acquisitions and restructurings in areas badly hit by COVID.

BOOST CONFIDENCE

To boost investor confidence, CSRC said it will encourage listed firms to buy back their shares to stabilise prices. Major shareholders and senior executives are also encouraged to actively buy shares when prices fall sharply.

Meanwhile, state shareholders should actively buy undervalued stocks, and support share buy-back and cash dividend plans by listed firms, according to the statement, which was jointly published by the CSRC, China’s state assets supervisor, and the All-China Federation of Industry and Commerce.

China is also stepping up efforts to woo foreign investors, amid signs of capital outflows.

The Shanghai Stock Exchange said late on Monday that it had held a virtual roadshow with nearly 200 representatives from global investors including sovereign wealth funds and pension funds, to promote index investments tracking China.

The promotion came after Institute of International Finance (IIF) data showed outflows of $6.3 billion from China equities in March, and $11.2 billion out of China bonds.

“Investor sentiment toward Chinese equities remains negative amid elevated regulatory risk and concerns that the asset class provides limited hedge against stagflation risk,” Manulife Investment Management said in a note on Tuesday.

The money manager expects slower growth in China, citing challenges including the rising economic costs of zero-COVID policies, which damp consumption.

Also citing the “substantial” costs of China’s strategy to fight COVID, Nomura said late on Monday China is facing a rising risk of recession.

(Reporting by Meg Shen and Ella Cao; Editing by Hugh Lawson, Himani Sarkar and Kenneth Maxwell)

By Aradhana Aravindan and Chen Lin

SINGAPORE – Singapore’s economy likely expanded at a slower pace in the first quarter, but is expected to stay on its recovery path this year as border controls are relaxed further, giving the central bank room to tighten monetary policy to tackle inflation.

Advance data on Thursday is seen showing gross domestic product (GDP) expanded 3.8% in January-March from a year ago, according to the median forecast of 15 economists in a Reuters poll, as the manufacturing sector comes off a high base and amid travel curbs to curb a COVID-19 outbreak driven by Omicron.

Manufacturing remained the main growth engine, helped in part by demand for semiconductors, analysts said. The city-state’s economy expanded 6.1% year-on-year in the fourth quarter of 2021.

Singapore’s recent easing of border controls and COVID-19 rules are expected to boost services from the second quarter, partly offsetting the negative impact of the Ukraine-Russia war, supply disruptions and rising energy prices, Maybank economists Chua Hak Bin and Lee Ju Ye said.

The trade-reliant economy grew 7.6% last year, the fastest pace in a decade, recovering from a 4.1% contraction in 2020.

The government had projected GDP growth of 3-5% in 2022, though this was before Russia began what it calls “a special military operation” in Ukraine on Feb. 24.

Inflation has become the key risk this year and while economists expect GDP to continue to grow they are watching to see whether official forecasts are revised when the central bank gives its monetary policy statement, also on Thursday.

Sixteen economists expect the Monetary Authority of Singapore to tighten its policy, but are divided on how aggressive it will be and which of its settings will change.

Instead of interest rates, the MAS manages policy by letting the local dollar rise or fall against currencies of its main trading partners within an undisclosed band, known as the Nominal Effective Exchange Rate (NEER).

It adjusts its policy via three levers: the slope, mid-point and width of the policy band.

DBS Senior FX Strategist Philip Wee expects a third steepening in the slope of the SGD NEER policy band to 3%.

“We expect the authority to keep the door open for another tightening in October. The MAS could re-centre the policy band higher six months after returning to a 3% slope, as they did in April 2008 and April 2011,” he said.

(Reporting by Aradhana Aravindan and Chen Lin in Singapore; Polling by Devayani Sathyan and Arsh Tushar Mogre; Editing by Ed Davies)