The latest set of economic data out of China suggests that the nation's economy could b...

THE LATEST SET OF ECONOMIC DATA OUT OF CHINA SUGGESTS THAT THE NATION’S ECONOMY COULD BE BOTTOMING OUT, SAYS JOHN WOODS OF CITI INVESTMENT MANAGEMENT.

SHOWS: HONG KONG, CHINA (AUGUST 12, 2013) (REUTERS - ACCESS ALL)
JOHN WOODS, HEAD OF FIXED INCOME, CITI INVESTMENT MANAGEMENT
1. REPORTER OFF CAMERA SAYING:
"Japan GDP numbers came out weaker than forecast. What do you make of the results?"
2. JOHN WOODS SAYING:
"Okay so the numbers were a miss. Some might describe a pretty large miss. And I think that was largely down to an unwillingness, particularly on behalf of corporates actually, to invest. So the capital expenditure component of GDP surprised at the downside. Conversely the private consumption actually surprised to the upside. So I guess there’s a mix of takeaways, if you will. It’s positive that there’s a trickledown in terms of sentiment among consumers to spend a little more - Abenomics is clearly having a positive effect there. But there are some blockages as well. And by that I mean a lack of confidence by corporates really to open the wallets and start rolling out capex in any material way."
3. REPORTER OFF CAMERA SAYING:
"And how will the data affect Prime Minister Shinzo Abe’s decision to raise sales taxes?"
4. JOHN WOODS SAYING:
"Well actually I think the GDP number, particularly the capex component, completely reflects concern over the sales tax issue. You will be aware last time it was introduced there was an awful lot of debate, there was an awful lot of concern that it would kill the nascent recovery, which effectively it did. And I think this reluctance on behalf of corporates to roll out capital expenditure really reflects their concern. Now I guess we’re not going to know fully about what will happen to the sales tax until late September early October. But already we’re hearing variants. At one point, oh sorry, at one extreme, there’s discussion that it could be abandoned completely. At the middle levels of discussion as it were, there’s a delayed timetable or a reduced component in terms of scale of the tax. And of course right at the end it’s business as usual. The tax will be implemented…