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China PMI: Strong Data Boosts Shanghai Index


Nov. 1 2019, Published 8:22 a.m. ET

China’s PMI increased to 51.7 in October from 51.4 in September, which indicates an expansion in manufacturing activity. The Caixin China General Manufacturing PMI rose to the highest level since February 2017. Notably, a reading above 50 hints at an expansion in manufacturing. The Shanghai SSE Composite Index closed approximately 1% higher today. The Caixin Manufacturing PMI is based on data compiled by IHS Markit from more than 500 manufacturing companies.

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Official China PMI shows contraction

In contrast to the Caixin PMI, the official China PMI data released by the National Bureau of Statistics of China showed a contraction in manufacturing in October. According to the official data, China’s manufacturing PMI fell 0.5% to 49.3% in October. Like the Caixin PMI, a reading below 50 indicates a contraction. China’s manufacturing has contracted for the sixth consecutive month, according to the Bureau’s PMI.

What does the PMI show?

Zhong Zhengsheng, the director of macroeconomic analysis with CEBM Group, said, “China’s manufacturing economy continued to recover at a relatively quick pace in October.” He also said, “However, business confidence has been weak.” CEBM Group is a subsidiary of Caixin Insight Group.

Meanwhile, new export orders rose for the first time in five months. The US-China trade war has impacted Chinese exports to the country.

Shanghai index gains

Today’s 1% rise in the Shanghai Index suggests that investors are probably tilted more towards the manufacturing growth story.

In US markets, the iShares MSCI China ETF (MCHI) fell 0.37% on Thursday—broadly in-line with the US and Chinese indexes. Similarly, the iShares China Large-Cap ETF (FXI) fell 0.41%. Likewise, top Chinese online retailers Alibaba (BABA) and JD.com (JD) fell 0.48% and 1.7%, respectively, on Thursday. Alibaba has risen around 1.6% in pre-market trading today.

To learn more about the world’s top online retailers, including Alibaba and JD, read Must-Know: The World’s Top Online Retailers.


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