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23 January 2019

Financial Markets (The Total Investment & Insurance Solutions)

World markets were mostly lower on Wednesday as news of possible hiccups in U.S.-China trade talks ratcheted up growth worries.

KEEPING SCORE: Germany's DAX gave up 0.5 percent to 11,036.81 and the CAC 40 in France lost 0.3 percent to 4,833.41. Britain's FTSE 100 was 0.6 percent lower at 6,858.75. Wall Street was set for a flat opening. The future contract for the Dow Jones industrial average was 0.1 percent higher at 24,404.00. The contract for the broader S&P 500 index was flat at 2,631.90.

THE DAY IN ASIA: Japan's Nikkei 225 index shed 0.1 percent to 20,593.72 after the Bank of Japan kept its short and long term interest rates intact as expected but lowered its inflation forecasts. South Korea's Kospi rose 0.5 percent to 2,127.78. Hong Kong's Hang Seng was almost flat at 27,008.20. The Shanghai Composite index gained 0.1 percent to 2,581.00. Australia's S&P ASX 200 slipped 0.3 percent to 5,843.70. Shares fell in Taiwan, Singapore and Indonesia but rose in Malaysia.

U.S-CHINA RELATIONS: White House economic adviser Larry Kudlow denied reports by media outlets including the Financial Times and CNBC saying the U.S. had turned down an offer by Chinese trade officials to meet in Washington this week, due to a lack of progress on issues such as protection of intellectual property. He said both sides are working toward the higher level talks. The reports, citing unnamed sources close to the matter, said the preparatory discussions were meant to pave the way for meetings between Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer next week. The news comes after the International Monetary Fund lowered its global growth estimates for 2019 and 2020.

ANALYST'S TAKE: "The U.S. strategy might be to raise pressure on the Chinese ahead of the hard deadline in March, but this makes for uncomfortable interpretation by markets, and could potentially induce excessive volatility in the interim," Chang Wei Liang of Mizuho Bank said in a commentary.

JAPANESE TRADE: On Wednesday, Japan released weaker-than-expected trade data for December. The country said its exports fell by 3.8 percent from a year earlier, its largest drop in two years. It also posted its first full-year trade deficit since 2015. Imports climbed 1.9 percent in December, missing the market estimate of a 3.7 percent rise, and way below November's 12.5 percent surge. Weaker Japanese exports suggest that a slowdown in China, the world's second largest economy, is starting to have an impact on companies elsewhere that rely on it for business.

ENERGY: U.S. crude oil picked up 4 cents to $53.05 per barrel in electronic trading on the New York Mercantile Exchange. The contract closed $1.03 lower at $53.01 per barrel on Tuesday. Brent crude, used to price international oils, gained 5 cents to $61.55 per barrel. It dropped $1.24 to $61.50 per barrel in London.

CURRENCIES: The dollar strengthened to 109.60 yen from 109.37 yen late Tuesday. The euro rose to $1.1363 from $1.1361.The Total Investment & Insurance Solutions

Nifty, Sensex Directionless – Tuesday closing report-The Total Investment & Insurance Solutions

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22 January 2019

I have mentioned in Monday’s closing report that Nifty Sensex were still moving sideways. The major indices of the Indian stock markets were range-bound on Tuesday and closed with gains over Monday’s close. On the NSE, there were 532 advances, 1,171 declines and 355 unchanged. The trends of the major indices in the course of Tuesday’s trading are given in the table below: 

Sensex and Nifty ended lower on Tuesday in line with global markets over concerns of global growth as the International Monetary Fund (IMF) cut its GDP growth forecasts citing concerns over Sino-US trade tensions. The BSE metal index lost over 2%. Telecom and auto stocks witnessed selling pressure while the pharma sector gained. 

Stock-wise, Sun Pharma continued to gain on Tuesday. It ended with over 5% gain after its clarifications in a regulatory filing earlier in the day. Sun Pharma was followed by Kotak Mahindra Bank which reported a healthy third quarter earnings. Hero MotoCorp, Bajaj Finance and Bajaj-Auto surged up to 2%. In contrast, Vedanta, Tata Steel, Mahindra and Mahindra, HCL Tech and Bharti Airtel lost in the range of 2% to 3.50%. 

Two- and three-wheeler maker TVS Motor Co on Tuesday said it closed the third quarter of the current fiscal with 15.5% growth in its net profit at Rs178.4 crore. In a statement issued here, the company said its profit after tax (PAT) for the quarter ended on December 31, 2018 was at Rs178.4 crore, up from Rs154.4 crore posted for the quarter ended on December 31, 2017. For the period under review, the company's total revenue grew to about Rs4,664.6 crore, up from Rs3,703.1 crore in the quarter ended in December 2017. TVS Motor Co shares closed at Rs553.85, up 2.94% on the BSE.

Reliance Nippon Life Asset Management (RNAM), asset manager of Reliance Mutual Fund, on Tuesday said it closed the third quarter of the current fiscal with a net profit of about Rs110 crore. In a statement issued here the company said it had earned about Rs350 crore revenue from operations for the quarter ended December 31, 2018. The company board also declared an interim dividend of Rs3 per share. Reliance Nippon Life Asset Management Limited shares closed at Rs155.55, up 2.13% on the NSE.

Three persons, including two former Central Bank of India officials, were sentenced to three years of imprisonment by a CBI court for defrauding the bank to the tune of Rs122 lakh, the agency said on Monday. A special Central Bureau of Investigation court here sentenced former bank senior manager KK Chourasia, former assistant manager Vasant Pawase and Uday Singh Thakur, the managing director of a Bhopal-based construction company in the fraud case. According to the CBI, the two bank officials had processed, sanctioned and disbursed housing loan to the tune of Rs122.48 lakh in the name of 13 Individuals without verifying their credentials including that of the private company. The three were chargesheeted by the CBI for various offences including criminal conspiracy by the CBI and the trial court after convicted them sentenced them to three years of rigorous imprisonment along with fine. 

The Delhi-bench of National Company Law Tribunal (NCLT) has approved the merger of financially-stressed Tata Teleservices with Bharti Airtel. With the approval the merger gets a final shape over one year after it was announced by the respective companies in October 2017. "The NCLT has sanctioned the Composite Scheme of Arrangement between Tata Teleservices Limited, Bharti Airtel Limited and Bharti Hexacom Limited and their respective shareholders and creditors under Sections 230 to 232 of the Companies Act, 2013," Bharti Airtel said in a regulatory filing at the BSE. Bharti Hexacom is a subsidiary of the telecom major," Bharti Airtel said. The tribunal's order said: "In view of the foregoing, upon considering the approval accorded by the members and creditors of the Petitioner Companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, Income Tax Department and the Department of Telecommunication, there appears to be no impediment in sanctioning the present Scheme." Bharti Airtel shares closed at Rs304.45, down 2.22% on the NSE.

The top gainers and top losers of the major indices are given in the table below:

The closing values of the major Asian indices are given in the table below:

Major Indices (The Total Investment & Insurance Solutions)

Exporters may get incentives based on R&D, specific clusters under new FTP-The Total Investment & Insurance Solutions

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22 January 2019

 

exports (The Total Investment & Insurance Solutions)

Exporters are likely to get incentives based on parameters like research and development, productspecific clusters and production pattern under a five-year foreign trade policy (FTP) to be released later this year, an official said.

The commerce ministry is working on recasting the existing export incentive schemes in line with the global trade norms of the World Trade Organisation (WTO). "We are recasting our export incentive schemes. In the new FTP, they would be in compliance with the global trade rules.

The new incentives could focus on R&D activities, production parameters, productspecific clusters. Rebate can also be given on state levies," the official added. The last FTP was released in 2015 for five years. It provided guidelines for enhancing exports with an overall objective of pushing economic growth and job creation. Under an FTP, the government announces incentives for exporters.

Currently, duty benefits are provided under merchandise export from India scheme (MEIS) and services export from India scheme (SEIS). Recasting of the existing support measures assumes significance as the US has challenged these schemes under the dispute settlement mechanism of the WTO. America has alleged that these incentives are harming American companies.

The official said there are several productspecific clusters in sectors such as automobile, textiles and leather and providing direct incentives to them would help boost manufacturing and exports.

Currently, maximum incentives are cornered by big automobile and pharmaceutical companies under MEIS. In this scheme, the government provides duty benefits depending on product and country. "Ideally, the scheme should target MSMEs," the official added. For the new FTP, the commerce ministry is engaged with all commodity boards and ministries concerned for identifying the support measures compliant with global trade rules. According to Federation of Indian Export Organisations (FIEO), the new scheme should include refund of indirect taxes like on oil and power; state levies such as mandi tax.

 "The new scheme should help boost the country's exports," FIEO President Ganesh Gupta said. Since 2011-12, India's exports have been hovering at around USD 300 billion. During 2017-18, the shipments grew about 10 per cent to USD 303 billion.

Promoting exports helps a country create jobs, boost manufacturing and earn more foreign exchange. During April-December 2018-19, the country's total merchandise exports grew 10.18 per cent to USD 245.44 billion.The Total Investment & Insurance Solutions

Commerce ministry seeks stakeholders' views on report to revive SEZs -The Total Investment & Insurance Solutions

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22 January 2019

SEZ (The Total Investment & Insurance Solutions)

The commerce ministry Tuesday said it has sought stakeholders' views on a report submitted by a panel to revive special economic zones (SEZs). A committee headed by Bharat Forge NSE 1.54 % Chairman Baba Kalyani on promoting SEZs submitted its recommendations in November 2018.

The panel, which was appointed by the commerce ministry, has suggested continuation of tax incentives and an array of other measures to revamp SEZs. SEZs, which once contributed significantly in the country's exports, started losing sheen after the government decided to roll back tax incentives and imposed minimum alternate tax and dividend distribution tax.

 "The suggestions (of stakeholders) on the report are required to be sent latest by January 30," the ministry said in a statement. Other suggestions of the panel include renaming of SEZs to employment and economic enclaves (EECs), extension of sunset clause, incentives linked with investments, employment, technology and value addition, simplification of processes and tax benefits to services sector. Swift resolution of disputes through arbitration, flexibility in the dual-usage norms for non-processing areas in SEZs and extension of MSME schemes to these zones are some other recommendations of the panel.

The SEZ Act, 2005, supported by SEZ rules, came into effect on February 10, 2006. Exports from SEZs grew about 15 per cent to Rs 5.52 lakh crore in 2017-18 as compared to the previous fiscalThe Total Investment & Insurance Solutions

Government to approve power tariff policy soon: R K Singh -The Total Investment & Insurance Solutions

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22 January 2019

 

power tariff (The Total Investment & Insurance Solutions)

The government will soon approve the power tariff policy which would provide for a penalty for unscheduled power cuts by distribution companies from April 1, Power Minister R K Singh said Tuesday. "The proposal for tariff policy ready and will soon go for Cabinet approval. The policy provides for penalty for unscheduled power cuts except in the case of technical faults or act of God (natural calamities)," Singh said during an interaction with media persons here. He also informed that state power regulators would ascertain the penalty on discoms for voluntary load shedding. Talking about power sector reforms, he said that the second version of UDAY scheme(UDAY 2.0) meant for revival of debt-laden discoms is being worked out and would be launched with more technological interventions to reduce their aggregate, technical and commercial losses. About stressed assets, he said that as many as nine such power projects with total capacities of 11,400 MW have been resolved while efforts are on to bring others out of woods. There were 60 stressed power projects in the country, he noted.

About the recommendation of the high-level empowered committee headed by Cabinet Secretary P K Sinha, the minister said that the Group of Ministers on power sector headed by Finance Minister Arun Jaitley is in the process of vetting the suggestions given by the panel and would soon send those for Cabinet approval for implementation. About the manufacturing linked solar power tender, he said that another tender of 5GW capacity would be floated soon and the one floated earlier, which received response from just one bidder, would not be pursued further. He, however, informed that the auctioned capacity of around 2,500 MW under the earlier manufacturing linked solar tender would remain. About the household electrification scheme Saubhagya, the minister informed that as on date 1.92 lakh families are yet to be energised out of 2.48 crore targetted households.

He admitted that there are issues in energising families in Chhattsigarh due to left-wind extremism while difficult terrain pose challenge in Rajasthan and other hilly states. According to Saubhaya portal, 83,219 families are yet to be energised in Rajasthan while 76,758 households are left out. The number of unelectrified households are 20,293 in Chhattisgarh and 12,298 in Meghalaya. The minister said that 100 per cent household electrification would be achieved well ahead of March 31, 2019, timeline set under the scheme.The Total Investment & Insurance Solutions

World Shares Retreat On Fears Of Global, Chinese Slowdown-The Total Investment & Insurance Solutions

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22 January 2019

Financial Markets (The Total Investment & Insurance Solutions)

World markets fell Tuesday after the International Monetary Fund trimmed its global outlook for 2019 and 2020 and China said its economy grew at the slowest pace in nearly 30 years.

KEEPING SCORE: Germany's DAX gave up 0.5 percent to 11,076 and France's CAC 40 was down 0.7 percent at 4,834. Britain's FTSE 100 was 0.5 percent lower at 6,934. Wall Street, reopening after Martin Luther King Jr. Day, was set for early losses. Futures for the broad S&P 500 index declined 0.7 percent and Dow futures dropped 0.6 percent.

THE DAY IN ASIA: Japan's Nikkei 225 index shed 0.5 percent to 20,622.91 and the Kospi in South Korea sank 0.3 percent to 2,117.77. Hong Kong's Hang Seng lost 0.7 percent to 27,005.45. The Shanghai Composite index fell 1.2 percent to 2,579.70. Australia's S&P ASX 200 slipped 0.5 percent to 5,858.80. Shares rose in Taiwan and Thailand but fell in Singapore.

GLOBAL GROWTH: On Monday, the International Monetary Fund cut its 2019 global growth estimate to 3.5 percent from 3.7 percent, citing trade tensions and rising interest rates. It also revised its estimate for 2020 to 3.6 percent, down from 3.7 percent. IMF Managing Director Christine Lagarde, who presented the forecasts at the World Economic Forum in Davos, Switzerland, said the global economy was growing more slowly than expected amid rising risks. Earlier in the day, China reported its economy expanded by 6.6 percent in 2018. This was the slowest pace of growth since 1990 and it fueled fears a trade dispute with Washington is putting a drag on the world's second largest economy.

ANALYST'S TAKE: "The IMF's prognosis is fairly dire, and the prescription is a sensible approach of preventive management; to avoid escalating trade disputes, lower tariffs and build fiscal or financial buffers," Vishnu Varathan of Mizuho Bank said in a commentary.

BREXIT PLAN: British Prime Minister Theresa May presented her Plan B for Britain's exit from the European Union on Monday, but it looks a lot like the original. May said she will get more opinions on a widely-criticized "backstop" in the plan, aimed at preventing a hard border between the Republic of Ireland, part of the EU, and the U.K's Northern Ireland after Brexit. She will then "take the conclusions of those discussions back to the EU." The bloc has said it will not renegotiate the divorce deal, which has been resoundingly rejected by Parliament. "This really does feel a bit like 'Groundhog Day,'" Jeremy Corbyn, the leader of the opposition Labour Party said. In the 1993 film, a weatherman lives out the same day over and over again.

ENERGY: U.S. crude lost $1.00 to $52.80 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used to price international oils, dropped $1.24 to $61.50 per barrel.

CURRENCIES: The dollar eased to 109.45 yen from 109.65 yen late Monday. The euro slipped to $1.1360 from $1.1366. The British pound was steady at $1.2893.

Nifty Sensex Still Moving Sideways – Monday closing report-The Total Investment & Insurance Solutions

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21 January 2019

I had mentioned in Friday’s closing report that Nifty, Sensex were directionless. The major indices of the Indian stock markets were range-bound on Monday and closed with gains over Friday’s close. On the NSE, there were 543 advances, 1,183 declines and 348 unchanged. The trends of the major indices in the course of Monday’s trading are given in the table below:

Amid healthy third quarter earnings, Sensex and Nifty ended on a firm note on Monday, tracking similar trend in the global markets over easing trade tensions between the US and China. Asian markets were upbeat although China reported a slowdown in its GDP growth rate. China's economy grew 6.6% in 2018, the weakest annual performance since 1990, confirming a slowdown in the world's second largest economy that could threaten global growth, according to official data on Monday. China's growth was 6.8% in 2017. Energy, IT (information technology) and oil and gas sectors gained while the key finance stocks ended lower.

Kotak Mahindra Bank reported a 22.57% increase in its standalone net profit during the October-December quarter on a year-on-year basis. Its standalone net profit stood at Rs1,290.93 crore, up from Rs1,053.21 crore recorded during the third quarter of the financial year 2017-18, the bank said in a regulatory filing at the BSE. Its total income during Q3 of ongoing financial year (2018-19) was Rs7,214.21 crore, higher by 19.26% from Rs6,049.02 crore earned during the corresponding period of the previous year. "As on December 31, 2018, the GNPA (Gross Non-Performing Asset) was 2.07% and NNPA (Net Non-Performing Asset) was 0.71%," it said. Capital adequacy ratio of the bank, including unaudited profits as per Basel-III, as on December 31 was 18.1% and Tier-I ratio was 17.6%. Kotak Mahindra Bank shares closed at Rs1,274.00, up 2.73% on the NSE.

HDFC Bank reported a 20.32% increase in its net profit for the October-December quarter, on a year-on-year basis. Its net profit for the third quarter (Q3) of financial year 2018-19 stood at Rs5,586 crore, against Rs4,642 crore reported during the corresponding period of 2017-18, HDFC Bank said in a regulatory filing at the Bombay Stock Exchange. The total income of the bank in the period under review was Rs30,811 crore, 26.02% higher from 24,450 crore earned during Q3, 2017-18. Net interest income (interest earned less interest expended) for the quarter ended December 31, 2018 grew by 21.9% to Rs12,576.8 crore, from Rs10,314.3 crore for the quarter ended December 31, 2017, driven by asset growth of 23.7% and a core net interest margin for the quarter of 4.3%, the bank said. Further, total balance sheet size as of December 31, 2018 was Rs11.68 lakh crore as against Rs9.5 lakh crore as of December 31, 2017. HDFC Bank shares closed at Rs2,145.40, up 0.71% on the NSE.

The Indian rupee continued to depreciate for the second week on the trot, as it weakened by 69 paise to Rs71.18 against the US dollar from its previous close of Rs70.49.

Provisional data from the BSE since the start of year showed that foreign institutional investors offloaded stocks worth Rs2,318.76 crore as against domestic investors buying Rs1,842.31-crore shares.

The top gainers and top losers of the major indices are given in the table below:

The closing values of the major Asian indices are given in the table below: The Total Investment & Insurance Solutions

 

Major Indices (The Total Investment & Insurance Solutions)

Farm loan waivers to have minimal impact on state deficits: India Ratings -The Total Investment & Insurance Solutions

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21 January 2019

 

farm loan (The Total Investment & Insurance Solutions)

Even as farm loan waivers to come at the cost of capacity expansion in industry, such waivers have minimal impact on fiscal deficit according to ratings firm India Ratings. This has prompted the ratings firm to assign a stable outlook for states, many of whom have announces huge farm loan waivers in recent months.

The ratings firm expects the aggregate fiscal deficit of states to come in higher at 3.2% in FY'20 than the agency’s forecast of 2.8% in its FY'19 Mid-Year Outlook. Although this is higher than the fiscally prudent level of 3% of the gross domestic product (GDP), the ratings firm expects that this will not pose a significant upside risk to states’ aggregate debt burden in FY20. States’ revenue account on aggregate is expected to clock a deficit of 0.5% of GDP in FY'20 due to a higher growth in revenue expenditure than in revenue receipts. The competitive populism, in the nature of farm loan waivers and other financial support schemes, would take centre stage in the runup to next general elections in May 2019, it said.

A larger impact is expected on fiscal and revenue deficit to gross state domestic product ratios for Madhya Pradesh, Kerala and Rajasthan, in FY20. On the expenditure side, states’ aggregate revenue expenditure is expected to grow 18.9% y-o-y to Rs 33.3 lakh crore in FY'20 from 11.2% in FY'19.

The announcement of farm loan waivers by Madhya Pradesh, Chhattisgarh, Assam and Rajasthan in December 2018 extends the list of states that have resorted to this mechanism to address farmers’ distress. Additionally, Odisha and Jharkhand announced schemes to provide financial assistance to small and marginal farmers along the lines of the Rythu Bandhu Scheme implemented in Telangana.

During periods of fiscal adjustment, capex becomes a soft target for deficit control. Ind-Ra expects states’ aggregate capex/GDP to come in marginally lower at 3.0% in FY20 from the budget estimate of 3.07% for FY19. The agency believes capex/GDP could come in below 3% for Tamil Nadu, Haryana, West Bengal and Kerala in FY20. Ind-Ra expects the aggregate debt/GDP to rise to 25.1% in FY20 from the budgeted 24.3% for FY19.

The agency does not view the increase to be detrimental to states’ debt sustainability position, although states would channelise some part of borrowings towards meeting revenue expenditure. In Ind-Ra’s opinion, Madhya Pradesh, Tamil Nadu and Kerala are most susceptible to clock an increase in the debt burden in FY20. The Total Investment & Insurance Solutions

12 large state failed on jobs, despite faster growth: Crisil -The Total Investment & Insurance Solutions

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21 January 2019

Job(The Total Investment & Insurance Solutions)

Even as 12 large states grew faster than national GDP in FY18, the same has not translated into job creation, as GSDP expansion has come in from sectors which are less job-intensive, says a report. The Crisil NSE -1.82 % report comes in the immediate backdrop of a report by the independent thinktank Centre for Monitoring Indian Economy which said as many as 1.1 crore jobs were lost in 2018 alone.

 "Growth has not quite been conducive to job creation in a majority of the states," Crisil said Monday. It said 11 states have recorded lower growth in employment-intensive sectors such as manufacturing, construction and trade, and hotels, transport and communication services, compared with the national rate. In Gujarat, Bihar and Haryana, growth could have been more employment generating sectors have grown the fastest, it said, adding Rajasthan, Jharkhand and MP recorded the lowest growth.

No wonder of these the first and the last states voted the incumbent BJP governments in the December elections. The report said 12 states grew faster than nation last fiscal. The growth has not been equitable, it said, pointing out that the chasm on per capital income between low-income states and high income states has only widened. The Total Investment & Insurance Solutions

Most states were found to have veered off the targets under the fiscal responsibility and budget management act, the report said, adding because of the pressure on fiscal deficitfor the Centre, the states have become the engines of government spending, accounting for a bulk 65 percent of the total money spent. Rajasthan, Jharkhand and UP topped the tally in proportion of capex in state spending in the past three years, it said.

 However, critical areas including health, irrigation and education did not get as much attention on spending as it ought to have been, it added. Going by the three crucial factors of inflation, growth and fiscal deficit, Gujarat and Karnataka remained among top three performing states, it said, adding Kerala and Punjab stayed stuck in the bottom three

China's 2018 Economic Growth Sinks To 3-Decade Low-The Total Investment & Insurance Solutions

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21 January 2019

China (The Total Investment & Insurance Solutions)

China's economic growth hit a three-decade low in 2018, adding to pressure on Beijing to beef up stimulus measures and settle a tariff war with Washington.

Growth slowed to 6.6 percent from 2017's 6.9 percent as both the world's appetite for China's exports and domestic consumer spending weakened, official data showed Monday.

Forecasters said they expect Beijing to try to shore up growth by making credit cheaper, raising government spending and adopting measures to encourage sales of autos and consumer goods.

Communist leaders want to steer China toward slower, more self-sustaining growth driven by consumer spending instead of trade and investment. But the slowdown has been sharper than expected, prompting Beijing to boost spending on construction of roads and bridges and to order banks to lend more, especially to the entrepreneurs who generate most of China's new jobs and wealth.

"Downward pressure on the economy is increasing," the commissioner of the National Bureau of Statistics, Ning Jizhe, said at a news conference. He cited import controls, volatile financial markets and declining investment spending as factors.

Still, Ning insisted China can resist shocks, saying "the long-term trend of stability will not change."

Economic growth in 2018 was the lowest since 1990's 3.9 percent following the violent crackdown on pro-democracy protests centered on Beijing's Tiananmen Square.

Growth in the last quarter of 2018 dipped to 6.4 percent — the lowest quarterly level since the 2008 global crisis — from the previous quarter's 6.5 percent.

"The government is expected to implement more fiscal and monetary stimulus measures to support economic growth," Yanjun Lin of IHS Markit said in a report.

Growth in investment, retail spending and factory activity all declined, though analysts pointed to a flicker of improvement in manufacturing in December. It grew by 5.7 percent over a year earlier, up 0.3 percentage points from November.

Production of plastics, metals and specialized industrial machinery accelerated, "suggesting warming expectations for a pick-up in investment," Chaoping Zhu of J.P. Morgan Asset Management said in a report.

The trade dispute with the U.S. is proving costly.

Exports held up through most of 2018 despite President Donald Trump's tariff hikes on Chinese imports in a fight over Beijing's technology ambitions. But they contracted in December as the penalties began to depress U.S. demand.

The two sides have imposed tariff hikes of up to 25 percent on tens of billions of dollars of each other's goods in the fight over U.S. complaints that Beijing steals or pressures companies to hand over technology. Washington wants China to roll back plans for state-led industry development that its trading partners say violate its market-opening obligations.

The trade dispute, and reports of job losses and tumbling sales of autos and real estate, have unnerved Chinese consumers that Beijing is counting on to drive growth. As pocketbooks snap shut, the downturn could worsen.

China's top trade envoy, Vice Premier Liu He, is due to visit Washington for talks Jan. 30-31.

Business groups and economists said a decision by Liu and his American counterpart, Robert Lighthizer, to get directly involved would suggest earlier talks by lower-level officials made progress.

Trump said Saturday that trade relations with China were "going very well" and "a deal could very well happen."

Forecasters expect Chinese growth to bottom out this year as Beijing's stimulus efforts gain traction. However, they have pushed back the time frame for that due to weakening exports.

Public works spending "is shaping up to be the engine for 2019," Iris Pang of ING said in a report. "However, non-infrastructure business activities will be dismal this year. And debt will grow."

A meeting of Communist Party leaders in December promised tax cuts, better access to bank lending for entrepreneurs and other steps to help the private sector.

Chinese leaders have been warning that any recovery would be "L-shaped," meaning that companies and investors shouldn't expect growth to rebound to the previous decade's double-digit levels.

Forecasters expect growth to decline further this year to 6.3 percent or lower.

"China's economy is likely to weaken further before growth stabilizes in the second half of the year on the back of expanded policy stimulus," Julian Evans-Pritchard of Capital Economics said in a report.The Total Investment & Insurance Solutions