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20 Feb 2014
China HBSB PMI hits the market, risk aversion back?
FXStreet (Bali) - HSBC China flash manufacturing PMI for Feb came well below expectations at 48.3 vs 49.5 in Jan and 49.5 expected, which means a 1.2 points negative divergence, and a 7-month low.
To make matters worse, the underlying components did not show any signs to be optimistic, as output and new orders entered contraction territory, while the employment index came at a 5-year low.
While there is talk that the Chinese New Year may have had a negative effect, and despite other positive readings on credit and trade ('suspiciously high'), there is no question that the data is a major setback regardless of the angle it is viewed.
The risk is that the data brings back another period of risk aversion as concerns over a faster-than-expected slow down in China mount.
To make matters worse, the underlying components did not show any signs to be optimistic, as output and new orders entered contraction territory, while the employment index came at a 5-year low.
While there is talk that the Chinese New Year may have had a negative effect, and despite other positive readings on credit and trade ('suspiciously high'), there is no question that the data is a major setback regardless of the angle it is viewed.
The risk is that the data brings back another period of risk aversion as concerns over a faster-than-expected slow down in China mount.