China’s preliminary reading for a key purchasing manager’s index (PMI) fell to six and a half year low in August. The data that measures the level of a diffusion index based on surveyed purchasing managers in the manufacturing industry came out 47.1, below Reuters forecast of 47.7.
The figure indicates the contracting activity of the manufacturing industry and attests to the wariness of the Chinese investors regarding the overall outlook of China’s economy. Asian market plunge towards the bear market territory, with Japanese Topix 500 Index losing 3.08 percent as at the time of writing while China’s Shanghai SE composite lost 3.36 percent, losing a total of 11.86 percent so far this month.
In Hong Kong, Hang Seng Mainland 100I drop 2.57 percent on Friday to bring total loss in a month to 13.92 percent and 10.54 percent in a year. South Korea Index gradually erased profit gained in the first half of the year, dropping 4.52 percent early this morning after North Korea’s attack on its border.
New Zealand’s S&P/NZX 20 Index gained 0.41 percent closing at 4,285.2, bringing its profit to 7.30 percent so far this year. Also, Malaysia FTSE Bursa Malaysia KLCI gained 0.31 percent amid economic crisis and domestic political tension, the market has lost over 15 percent of its total value this year and 8.86 percent this month alone.
Emerging markets rout continues as countries intensify currency war to boost the manufacturing sector of their economies, with China leading the war on devaluation backed stimulus to stem the economy through rout, the question is when would manufacturing pick up in the second-largest economy.
According to He Fan, chief economist at Caixin Insight Group “The Caixin Flash China General Manufacturing PMI for August has fallen further from July’s two-year low, indicating that the economy is still in the process of bottoming out”.
“There is still pressure on maintaining growth rates, and to realize the goal set for this year the government needs to fine-tune fiscal and monetary policies to ensure macroeconomic stability and speed up the structural reform,” he added.