China surprised the markets with trade deficit figures - BBH

Research Team at BBH explains that China surprised the markets today as despite being well aware of distortions caused by the Lunar New Year, investors were surprised by the news that China recorded a trade deficit in February.  

Key Quotes

“The $9.15 bln shortfall is the first since February 2014.  Exports collapsed, falling 1.3% after rising 7.9% year-over-year in January.  The median estimate in the Bloomberg survey was for a 14% increase.  Imports surged 38.1% (16.7% in January), compared with the median estimate of 20%.  The recorded trade deficit and the build in reserves reported yesterday are not preventing new yuan weakness.  The dollar is edging above CNY6.91 to reach its highest level since mid-January.  It has nearly retraced 61.8% of this year's fall (~CNY6.9135).  It seems more a case of dollar strength then yuan weakness.”