A new manufacturing survey from HSBC shows that China manufacturing is slowly getting better, which is ultimately the right pace.
Any economic data from China is always suspect. But reports of richer purses at water buffalo fights could be considered — wait for it… a bullish indicator for the Chinese consumer.
China was the focal point overnight as equities in the emerging markets giant dropped over 1.5% on disappointment Chinese officials made no weekend stimulus announcement. The failure to ease prompted Merrill Lynch to downgrade China’s GDP forecast from 8% to 7.7%, citing economic concerns.
Asian and emerging markets are ending the week quietly lower on broad bases as more economic data was released, reinforcing that China is indeed slowing.
When it comes to the value of the renminbi (CNY, quote), the twin engines of economic growth for the Chinese economy oppose each other. About 40% of China’s gross domestic product emanates from exports to the U.S. and Europe. The Chinese real estate market provides about 30% of the economic growth in the People’s Republic.
Most Asian markets finished slightly lower while spending most of the day oscillating from negative to positive and back.
As I’ve indicated in pretty much every post this week surrounding the European Union summit, the likelihood of them coming up with a solid actionable plan is low, and the euro zone will continue its slide further into recession.
The European finance ministers’ bailout plan continues to wreak havoc on the commodities market with copper prices trading at a five month low. Markets remain suspicious of the €100 billion ($125 billion) bailout of Spanish banks.