China PMI

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#31
Jun 26 2015 at 11:12 AM Updated Jun 26 2015 at 1:33 PM
HSBC dumps China PMI as Beijing tightens information flows

HSBC's sponsorship of the 'flash' China PMI will finish at the end of this month after the bank did not renew its global agreement with the survey's private sector compiler, Markit. BOBBY YIP


by Angus Grigg
For those on wanting to understand China there is one economic statistic more closely watched than any other.

It's the Flash Purchasing Managers Index - or PMI - which is released in the last week of every month.

The index claims to be the "earliest available indicator" of activity in China's giant manufacturing sector and it moves markets from Shanghai to Sydney, while providing a talking point for pundits.

For the last five years the index has been sponsored by HSBC, giving the bank an easy stream of publicity and allowing it to brand itself as an authority on the Chinese economy.

But HSBC's sponsorship will finish at the end of this month after the bank did not renew its global agreement with the survey's private sector compiler, Markit. The bank will end its sponsorship of all 23 emerging market PMI's produced by Markit.

A spokeswoman for HSBC confirmed its exit to AFR Weekend and said the bank would refocus its marketing dollars towards other projects.

She denied there was anything more to it than the bank moving on after "five successful years".

TOO RISKY

This would suggest other big foreign banks operating in China will jump at the chance to sponsor the survey and have their name splashed all over the media each month.

Not so, according to one person who was approached to take on the sponsorship.

While attracted by the branding opportunity his organisation declined as it was "too risky" in the current climate.

"If you are a sizeable bank that wants to do more business in China you don't want to make parts of the Chinese government angry," says the person who asked not to be named. "Sponsoring the survey is likely to affect your future business expansion in China."

The issue is that the HSBC/Markit PMI has been consistently weaker or more negative over the last year than the official PMI released by China's National Bureau of Statistics. In a country where the official narrative on everything from the economy to the weather is tightly controlled, this is a problem as it reinforces the view that China's official data can't be trusted.

Putting your name to such a high profile survey therefore makes you a target for China's regulators, according to the source.

"We don't want any extra attention," he says.

LEAKING FEARS

A secondary issue is the risk the information may leak internally and be used by traders at the bank to profit.

After the Libor rigging scandals of recent years that would provide another nasty regulatory headache and potentially open the bank up to litigation and fines.

But the far bigger risk in taking on such a sponsorship is the Chinese government and its obsession with controlling information, particularly anything that might indicate the economy is weaker than the official data suggests.

Beijing already has a long track record of stopping such information being made public. According to one economist who tracks data releases closely, China's National Bureau of Statistics stopped publishing detailed break downs on the production of some building materials as the housing market started to sour last year.

This meant economists found it more difficult to cross check official statistics on property construction.

A similar tactic was used in the auto sector. When some began questioning official car sales figures by pointing to a drop in registrations, the government stopped reporting the latter. The lack of transparency on official statistics is paired with tight control of the local media.

On Tuesday when the Shanghai Composite Index was down 5 per cent at lunch time, Chinese propaganda authorities directed local journalists to minimise their coverage. If they did report on the dramatic morning session they should emphasis the "positive" aspects of the share market boom not dwell on the negatives, according to a message seen by the AFR Weekend.

Another issue is the collection of what is often deemed sensitive information in China. This is a very large grey area and has seen the likes of BHP Billiton put strong internal controls in place when it sends research teams into the field in China. So worried is the big miner about being accused of stealing state secrets that it aggregates statistics from regions rather than individual areas, so as to not be seen as monitoring individual steel plants or iron ore mines.

This is the environment facing Markit as it prepares to announce a new sponsor for its China PMI and others in the region. Richard Willis, a director of Markit, says the new partner would be announced shortly.

"It's a blue chip name …. but no its' not a bank," he said via phone from London. "Times have changed and banks are certainly more risk averse these days."

The new sponsorship deal ensures the China PMI will survive as a closely watched, but more importantly, independent data point for those trying to make sense of the world's second biggest economy.
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#32
China media group to sponsor PMI
FERGUS RYAN BUSINESS SPECTATOR JUNE 30, 2015 2:21PM

Chinese media group Caixin has announced it will be taking over sponsorship from HSBC of Markit’s China PMI, the monthly and highly anticipated gauge of activity in the country’s manufacturing sector.

HSBC’s sponsorship will finish at the end of this month after it did not renew its global agreement with the survey’s private sector compiler, Markit.

The Markit PMI surveys have regularly produced numbers which are at odds with the official gauge, prompting speculation HSBC’s decision to dump the survey was due to pressure from Beijing.

However, Caixin says the gauge would continue to provide “up-to-date, accurate and often unique monthly indicators of economic trends”. The survey will also include commentary by “renowned economists”.

“Caixin has always been dedicated to building a professional and trustworthy platform for both financial and business news and information” said Caixin’s executive president Zhang Xiang.

“This cooperation will help push forward the development of Caixin’s business on the information front.”

According to Caixin, the agreement may also be extended to include further cooperation with Markit on financial data and other services.

Nikkei will be sponsor of 10 PMI surveys in the Asia Pacific region (excluding China) as well as other regions.

The China data release will be renamed the Caixin China PMI and will be published from August, Caixin Media said.

The Chinese government’s monthly official PMI has often given more positive results than Markit’s. The government sample is larger, and analysts say it is more focused on big companies.

HSBC had held the rights for the past five years, with Hong Kong-based brokerage and investment group CLSA sponsoring it before that. The British banking group is cutting costs worldwide and has also dropped its funding for PMIs outside China.

Business Spectator
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#33
http://www.cnbc.com/id/102800972

China's twin PMIs paint lackluster picture
CNBC.com staff | @CNBC
2 Hours Ago
CNBC.com
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China's vast manufacturing sector remained lackluster in June, twin Purchasing Managers' Index (PMI) surveys showed on Wednesday, fueling calls for additional stimulus measures to boost the world's number two economy.

China's official manufacturing PMI stood at 50.2 in June, unchanged from the previous month and just above the 50-mark that separates growth from contraction, data showed on Wednesday. A Reuters poll had expected a figure of 50.3.
"In general, the softness in the manufacturing sector remains, requiring more policy recalibration," Liu Li-Gang and Zhou Hao, economists at ANZ, wrote in a note following the data.

The final HSBC PMI, published 45 minutes after the official data, came in at 49.4 in June - below a preliminary reading of 49.6 but a touch above the 49.2 recorded in May.
"The final reading of the HSBC China Manufacturing PMI pointed to a further decline in the health of the manufacturing sector in June. This was predominantly driven by the sharpest rate of job shedding across the sector since early-2009, while output also fell slightly on the month," said Annabel Fiddes, economist at Markit.

"On the upside, there were some signs of improvement in the shape of renewed increases in total new orders and new export business, suggesting that client demand both at home and abroad is reviving. However, it is likely that more stimulus measures will be required to ensure that the sector can regain growth momentum and to encourage job creation," she added.

Chineseeconomy healthier than data suggest: Beige Book

The People's Bank of China (PBoC), the country's central bank, surprised markets with some aggressive monetary easing over the weekend - cutting both interest rates and the reserve requirement ratio (RRR) for select banks. The easing package came on the heels of a deep correction in the the country's stock markets. China last cut both interest rates and the RRR at the same time in December 2008, at the peak of the global financial crisis.

ANZ expects the PBoC will further lower interest rates by 25 basis points in the third quarter, and cut the RRR by additional 100 basis points in the second half of this year.

"Looking ahead, as real interest rates faced by Chinese corporates remain elevated, we see that further monetary easing is still highly needed," Liu and Zhou said.
The Australian dollar strengthened against the greenback following the HSBC final PMI, up 0.1 percent at $0.7719.
China's benchmark Shanghai Composite, meanwhile, trimmed losses from 0.8 to 0.4 percent, and the CSI 300 index pulled back into neutral territory.

The official PMI is skewed towards large companies and state-owned enterprises, while the HSBC PMI focuses more on small and medium-sized firms.

June is the final month that HSBC will sponsor the closely-followed data series. Chinese media group Caixin will take over the sponsorship starting in July.

CNBC.com staff
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#34
http://www.bbc.com/news/business-33754851

China factory activity falls to weakest in two years
3 August 2015
From the section Business
Chinese factory workers
Manufacturers have been cutting production at the fastest pace since November 2011
Factory activity in the world's second largest economy, China, shrank the most in two years in July as new orders fell more than expected.
The private Caixin/Markit manufacturing purchasing managers' index (PMI) dropped to 47.8 in July from 49.4 in the previous month.
It is worse than a preliminary reading of 48.2 and is the fifth consecutive month of contraction in the sector.
A figure below 50 shows contraction in the sector and one above means growth.
The reading was the lowest since July 2013, when it fell to 47.7.
The disappointing results, which focus on small to mid-sized companies, come after the official survey over the weekend also showed signs of a slowing Chinese economy.
The official PMI, which focuses on larger companies, fell to 50 in July from 50.2 in June as growth stalled unexpectedly.
Deteriorating sector
Bernard Aw, market strategist at trading firm IG said the data was not surprising and reinforced the view that there will be further weakness in the economy.
"I feel that the macro outlook of China - which is probably slowing further - has already been considered by the market," he said in a note on Monday.
The deterioration in China's vast manufacturing industry comes despite the government recently intervening heavily to boost the economy and stock market.
The central bank has already cut interest rates four times since November. It has also continuously eased lending rules for banks in aggressive measures to spur spending.
But manufacturers continued to cut production levels, with July seeing the fastest rate of contraction since November 2011.
Factory production - which contributes to the overall manufacturing activity reading- was at 47.1 in July, shrinking for the third month in a row.
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#35
doesn't sound like things are going too well in the middle kingdom.

Moderator maybe you can update thread title to 2015?
Virtual currencies are worth virtually nothing.
http://thebluefund.blogspot.com
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#36
whole world is sick... all going bankrupt like I say... no where to hide and even $ in bank is illusionary since everyone is counting on each other...

(03-08-2015, 10:50 PM)BlueKelah Wrote: doesn't sound like things are going too well in the middle kingdom.

Moderator maybe you can update thread title to 2015?
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#37
Heh, fortunately singapore is one of the few net creditor countries with no external debt.

During bankruptcy, creditors will have first dibs! Good for us! Big Grin
Virtual currencies are worth virtually nothing.
http://thebluefund.blogspot.com
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#38
(03-08-2015, 10:50 PM)BlueKelah Wrote: doesn't sound like things are going too well in the middle kingdom.

Moderator maybe you can update thread title to 2015?

I have updated it to "China PMI" without the year. No need to change it again next year.

Regards
Moderator
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#39
(04-08-2015, 09:45 AM)CityFarmer Wrote:
(03-08-2015, 10:50 PM)BlueKelah Wrote: doesn't sound like things are going too well in the middle kingdom.

Moderator maybe you can update thread title to 2015?

I have updated it to "China PMI" without the year. No need to change it again next year.

Regards
Moderator

good job thanks, hehe didn't think of that Big Grin
Virtual currencies are worth virtually nothing.
http://thebluefund.blogspot.com
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#40
The retreat of hot $, high gearing associated with properties with rising vacancies, soaring costs after years of asset inflation and the eroding competitiveness is already reflected on the sick state of affairs of SGX.

The situation now remind me of the situation in the run up to 1997. Wait and see how the economics unfold.



(04-08-2015, 08:52 AM)BlueKelah Wrote: Heh, fortunately singapore is one of the few net creditor countries with no external debt.

During bankruptcy, creditors will have first dibs! Good for us! Big Grin
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