China's FAI growth slowed sharply

China's FAI data disappointed the market. The sharp fall in investment growth, especially property investment growth, is a headwind to the economy. YTD FAI growth fell to 12% y/y in April from 13.5% in March, according to National Bureau of Statistics (NBS). This implies a single-month deceleration to 9.6% y/y in April from 13.1% in March. 

Infrastructure investment grew 16.6% y/y in April, above the headline figure, but this was offset by a further slide in manufacturing and property investment growth. Real-estate investment growth moderated further to 6.0% y/y in January-April from 8.5% in Q1.

The property-market correction continues to dampen developers' appetite for new land and projects. Forward-looking indicators, including new starts and land purchased by developers continue to contract, pointing to still-sluggish property investment in the coming months. Funding constraints continue to weigh on investment. Funds secured for FAI grew by 5.1% y/y in April, down from 6.8% in Q1. 

Within this, funding from the state budget fell 10.2% y/y and funding from domestic loans rose 2.3% y/y; this is an improvement from the 3.7% y/y decline in Q1 (albeit still a weak number), suggesting that easing measures in recent months may have started to improve credit availability, says Standard Chartered.