The Conference Board
The Conference Board is a global, independent business membership and research association that publishes leading and composite economic indexes for various countries.
The Conference Board LEI (Leading Economic Indicator) for China aggregates six economic indicators that measure economic activity in China. They are:
- total loans issued by financial institutions
- Raw Materials Supply Index
- manufacturing PMI supplier deliveries
- Consumer Expectations Index
- total floor space started
- manufacturing PMI export orders
The Conference Board’s LEI
The Conference Board’s LEI for China rose by 1% in August, following a 0.90% rise in July.
The total loans issued by financial institutions and housing starts had the largest positive contribution to the index. In contrast, consumer sentiment, new export orders, and supplier delivery fell in August.
Also, the LEI’s six-month growth rate fell. This points to weakening economic conditions in the coming months.
The Conference Board CEI
The Conference Board CEI (Coincident Economic Index) for China measures the current economic activity. It rose by 0.80% in August, following a 1.10% rise in July.
Impact on mutual funds
With a rise in bank loans, the financial sector would benefit. Since all of the China-focused mutual funds in this review—namely the Clough China Fund – Class A (CHNAX), the Fidelity China Region Fund – Class C (FHKCX), the John Hancock Greater China Opportunities Fund – Class A (JCOAX), and the Matthews China Fund – Investor Class (MCHFX)—have more than 20% exposure to financial sector, they stand to gain.
Lower consumer sentiment means fewer orders from the local and export market. In turn, this leads to a fall in revenue. Ultimately, it impacts companies’ margins.