2013-02-25 09:56:31 - Fast Market Research recommends "China Infrastructure Report Q2 2013" from Business Monitor International, now available
BMI Industry View
BMI View: We maintain our forecast for 2013 of higher construction industry value growth year-on-year, based on the growth trajectory anticipated for the wider economy. We have however intervened in our 2013 forecasts to moderate infrastructure industry value growth and increase residential and non-residential real growth, in line with trends we are expecting in the two sectors for 2013.
Efforts to boost economic growth that got under way in Q412 via infrastructure stimulus are going to continue into the first half of 2013. This will fuel growth in the railways infrastructure segment, which we see growing by 6.3% over the year. In line with our macroeconomic forecast though, we expect the stimulus to run out of steam in the
second half and therefore a curtailment in fixed asset investments to get under way in the latter part of the year. Our long term growth trajectory view remains the same, showing a steady deceleration in construction industry value real growth. Risks to our forecasts are to the upside, stemming from a better than expected economic performance for capital investments.
Full Report Details at
- www.fastmr.com/prod/541173_china_infrastructure_report_q2_2013.a ..
Key developments in China's infrastructure sector:
* Fixed asset investments in railways halted a two-year contraction showing the first year-on-year (y-o-y) increase in November 2012 - a result of the stimulus measures announced in September 2012. We expect the revival in growth to continue into the first half of 2013, leading to growth in railways industry value of 1.4% for the whole year. * * Following two years of a marked deceleration in real estate fixed asset investments we are seeing a sustained revival in fixed asset investments in the sector. The end to the draconian government measures to cool property speculation has accelerated growth in investments in new assets, and as such we have intervened in our 2013 forecast to increase growth significantly as base effects take charge of the market. Long term, we maintain our view of a deceleration in residential and non-residential construction industry value. * * Gas-related infrastructure will see a massive boost as the government focuses on re-aligning the energy mix away from coal and towards gas. This includes investment in gas distribution infrastructure, liquefied natural gas (LNG) terminals and gas-fired power plants. * * Airports remain high on the government's agenda, which is reflected in our bullish airports infrastructure value forecast. The Chinese government announced that it will build 82 airports and refurbish a further 101 by 2015. This will take the number of airports in the country to around 230. * * Whilst social housing builds have the potential to significantly drive construction, our concerns over the ability of indebted local governments to meet their share of funding requirements mean we see risks to the timely implementation of the ambitious scheme. A tightening in project funding is highlighted by the central government's announcement that social housing unit starts for 2012 were due to be 7mn - down from 10mn units in 2011.
China offers scale - measured in terms of total construction industry value - and high levels of growth, combined with a high level of capital investment as a percentage of GDP. The combination of these three factors plays strongly in China's favour in our infrastructure risk/reward ratings (RRRs). However, the strength of its infrastructure market often masks the high barriers to entry, the opaque regulatory and legal framework and the uncompetitive environment, which have shaved points from the country's overall ratings. In BMI's Infrastructure RRRs, China scores 64.9 out of 100, with its strong infrastructure market propelling it near the top of the regional table.
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