What are the factors to drive base metals this week?

A series of economic data will be due this week, and with strong speculative activities, base metals prices will each continue down recent trendlines, as per major Chinese analysts.

Analysis of Major Macro News in China
The National Bureau of Statistics (NBS) shows that China’s GDP grew at an annualized 7.4% in 1H, as Q2 growth accelerated to 7.5% (annualized), said Shanghai Metals Market.

China has undertaken small stimulus measures – including infrastructure investments and adjustments to bank lending ratios – leading to June’s rise in fixed-asset investment.

Investment contributed less than 3.6 percentage points to H1 growth, below the 4.1 percentage points from consumption. But, current growth remains heavily dependent on government-driven consumption, which has served to counter slides in manufacturing and real estate, but at the price of a spike in lending. New lending in June outpaced the previous three months.

China will maintain a pro-growth posture into 2H. A series of measures are expected to expand the money supply – including tax cuts and increased capital lending – to counter a steep drop in forex receipts. 

The PBOC is also likely to cut deposit reserve ratios for all financial institutions after a recent targeted cut. Nevertheless, China’s economy continues to face pressure from the lack of domestic demand and a sluggish real estate sector.