In a research note to clients, Hong Kong-based Reorient Group writes:

China’s real economy fell into a pothole in April, with one clear exception — the housing sector, where new home sales jumped +7.7% y-o-y by area and 13.3% by value. The May 13 data release, covering April retail sales, fixed investments, and industrial output, points to the same broad challenge as those from the earlier PMI, trade, and inflation reports. Evidently, the more tangible effects of economic stabilization policies thus far remain largely confined to the financial and housing markets. No wonder the NBS pre-issued a five-point comfort late Tuesday reassuring investors that the economy is “operating within a reasonable range” into 2Q. However, risks are definitely brewing as FAI slowed sharply alongside a more conservative-than-expected bank lending figure.

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