1 Dec 2014
Manufacturing PMI surveys signal weakening growth in China - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, notes that the official and HSBC PMI surveys are both signalling that the Chinese economy is likely losing momentum heading into year end.
Key Quotes
"The price of copper has also fallen to a fresh cyclical low overnight which has been reinforced by the release of the weaker than expected China manufacturing PMI survey for November. The survey revealed that business confidence in the manufacturing sector declined by 0.5 point to 50.3 in November reaching its lowest level since March 2014."
"The survey peaked in July 2014 at 51.7. HSBC’s manufacturing PMI survey was also confirmed at 50.0 in November. The official and HSBC surveys are both signalling that the Chinese economy is likely losing momentum heading into year end. The latest non-manufacturing PMI surveys will be released on Wednesday."
"The loss of economic growth momentum in China prompted the PBoC to recently lower interest rates for the first time since July 2012. The PBoC has also announced fresh financial reform over the weekend releasing a draft rule to introduce an insurance system for bank deposits."
"The government will insure deposits of as much as CNY500k per saver at each bank covered. The draft rule did not give a start date or detail what premiums bank may pay, saying only that they may differ depending on lenders’ management and risk conditions."
"The PBoC stated that the system can “promote the establishment of market-based risk prevention and resolution mechanisms”. The ratios will be much lower than the starting level in most countries with a deposit insurance system and the financial impact on lenders is very small."
"The renminbi has weakened modestly over the past week although the daily fixes have been set higher. USD/CNY is currently trading just above the daily fix."
Key Quotes
"The price of copper has also fallen to a fresh cyclical low overnight which has been reinforced by the release of the weaker than expected China manufacturing PMI survey for November. The survey revealed that business confidence in the manufacturing sector declined by 0.5 point to 50.3 in November reaching its lowest level since March 2014."
"The survey peaked in July 2014 at 51.7. HSBC’s manufacturing PMI survey was also confirmed at 50.0 in November. The official and HSBC surveys are both signalling that the Chinese economy is likely losing momentum heading into year end. The latest non-manufacturing PMI surveys will be released on Wednesday."
"The loss of economic growth momentum in China prompted the PBoC to recently lower interest rates for the first time since July 2012. The PBoC has also announced fresh financial reform over the weekend releasing a draft rule to introduce an insurance system for bank deposits."
"The government will insure deposits of as much as CNY500k per saver at each bank covered. The draft rule did not give a start date or detail what premiums bank may pay, saying only that they may differ depending on lenders’ management and risk conditions."
"The PBoC stated that the system can “promote the establishment of market-based risk prevention and resolution mechanisms”. The ratios will be much lower than the starting level in most countries with a deposit insurance system and the financial impact on lenders is very small."
"The renminbi has weakened modestly over the past week although the daily fixes have been set higher. USD/CNY is currently trading just above the daily fix."