The Chinese economy has grown at a modest pace but stocks were boosted.
China 50 – Daily Chart
The China 50 index has found support at the 12,000 level that could see a return to a bullish tone.
Surveys of Chinese factory managers presented a mixed outlook for the world’s second-largest economy in June, with steady growth but still underperforming. The China Federation of Logistics and Purchasing official purchasing managers index, or PMI, stayed at 49.5, in June. The 50 level marks the difference between expansion and contraction.
“From the perspective of output, China’s economy is maintaining expansion, but the momentum of recovery still needs to be consolidated,” Zhao Qinghe, senior statistician for the National Bureau of Statistics, said.
The PMI for new export orders slipped, possibly due to announcements by the European Union and United States to increase their tariffs on imports of electric vehicles from China.
A private-sector survey released on Monday by the financial media group Caixin provided a more optimist outlook, up to 51.8 from 51.7 in the previous month. That marked the fastest expansion of factory output in two years.
Analysts were expecting a drop but although sentiment was positive, the level of confidence among purchasing managers fell to the lowest in over four-and-a-half years. There are concerns about competition and uncertain market conditions, Caixin said.
“The divergence” between the Caixin and the official PMIs is growing and is likely because of differences in the sectors covered, said analysts at Goldman Sachs.
“Demand for consumer and intermediate goods was stronger than that for investment goods,” said Wang Zhe, senior economist at Caixin.
“Overall, the manufacturing sector kept improving in June, with supply, domestic demand, and exports continuing to grow,” he added.
