Home Smart Commentary Smart Look At The Week Ahead: How Is China Doing?

Smart Look At The Week Ahead: How Is China Doing?

Banks can tell us a lot about what is going on in an economy. They are, after all, at the front end of everything that goes on. When an economy is performing strongly, banks can make exceptional profits. But when an economy is on the ropes, banks can get badly hit.

A raft of Chinese banks are set to announce results that could provide a useful insight into how the country is doing. They include Bank of China (SEHK: 3988) and China Construction Bank (SEHK: 939) that report on Monday and Tuesday, respectively.

Bank of Communication (SEHK: 3328) has already provided a clue of the shape of things to come. It posted its first fall in first-half profit since its listing more than a decade ago in 2007.

On the economic front, the US trade deficit could widen to US$75 billion in July. Meanwhile, the unemployment rate could dip below 10% for the first time in four months. It dropped to 10.2% in July as many businesses continued to reopen and rehire following COVID-19 lockdowns.

China will report purchasing-manager indices that could show manufacturing, non-manufacturing and services continue to expand. Elsewhere, the balance of trade could register a sixth month of surplus after two months of deficit at the start of 2020.

The UK could register a fourth month of increased mortgage borrowing by UK households. Net mortgage borrowing could have jump to £2.5 billion in July, whilst house prices could have risen by 1.9% year on year.

And finally, the Reserve Bank of Australia could keep interest rates unchanged at 0.25%. Australia will also report second-quarter GDP that could show the economy shrunk 6.2%, which would be its fastest rate of contraction since records began.

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Disclosure: David Kuo does not own shares in any of the companies mentioned.