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05
May

Asia Stocks live blog: China’s data, Japan’s festival

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The downward revision to HSBC’s Chinese manufacturing data has surprised the market, with the result countering the stabilizing trend suggested in the government version of the same data.

 

Kim Eng Securities strategist Andrew Sullivan summarizes the problem in a note out this morning: “The questions now is, which way is the trend?”

Last week, China’s official Purchasing Managers Index (PMI) reading showed a second successive pick-up in April, rising to 50.4 from 50.3 in March, more or less in line with market expectations.

 

But HSBC’s China PMI — which rose to 48.1 from March’s 48.0 — focuses on the small and medium-sized enterprises, while the official data focuses on state-owned enterprises. So, Sullivan said, HSBC’s disappointing reading may only reflect that the SME’s are suffering, while the SOE’s are stabilizing.

 

Nonetheless, he said, the weak data from HSBC might prompt some more stimulus from the government over the coming months.

 

TD Securities strategist Annette Beacher didn’t seem too worried about the data, maintaining a forecast for China’s GDP to grow 7.5% during the current June.

Despite the disappointing result, she wrote, there might not be any howls of “Chinese hard landing” as it seems clear that HSBC PMI readings of between 48 and 50 are consistent with GDP growth of 7.25% to 7.5%, bang on the government’s target for this year of about 7.5%.

 

 

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