June PMI Data Release
Takeaway: Remember that China wants to cool commodity prices due to the pass-through of high input prices, leading to higher output prices. The PMI was above 50, meaning that manufacturing grew month-over-month though the pace of growth slowed from May. New orders and output expanded though also at a slower pace. IHS Markit’s Dr. Wang Zhe commented “Inflationary pressures remained as price measures stayed high. Both the gauges for input costs and output in June fell seven points from the previous month…the upwards trend for prices that has lasted for months moderated.” China’s effort to lower input costs might be working. IHS Markit conducts the Caixin survey of private companies, which tend to be medium and smaller-sized firms. Employment improved in the month showing that factories need more bodies to meet demand.
North Asian equity markets (Japan, China, Korea, Taiwan) and India were off while Southeast Asian equity markets were up. Hong Kong, Northbound, and Southbound Stock Connect were closed today for the Special Administrative Region Establishment Day. It was a fairly quiet night as President Xi’s speech at the CCP 100 year anniversary played to the domestic audience.
Didi came off yesterday’s intra-day high, though it was very active after hours. Didi is expected to grow revenue 33% in 2021 ($29B) and 29% in 2022 ($37B). A company of this size and scale is difficult to find globally.
Chinese healthcare stocks were strong overnight as policymakers mentioned support for traditional Chinese medicines. Real estate had a strong day, though I’ve had a hard time ascertaining why. Tech, energy, and industrials were off today, though the Mainland stocks within the MSCI China All Shares Index were only off -0.1%.
Closed for the Special Administrative Region Establishment Day.
Shanghai, Shenzhen, and STAR Board had a volatile session, closing off -0.07%, -0.97%, and -0.53% respectively as volume increased +9.13% from yesterday, which is 108% of the 1-year average. The 532 Mainland stocks within the MSCI China All Shares Index were off -0.1% as real estate rose +3.3%, healthcare +1.78%, staples +0.98%, and financials +0.16%, while tech fell -1.67%, energy -1.61%, industrials -1.13%, materials -0.97%, and discretionary -0.96%. The Mainland’s most heavily traded by stocks by value were broker East Money, which fell -4.97%, BYD, which fell -5.74%, Longi Green Energy, which fell -4.19%, Tianqi Lithium, which rose +2.55%, Jiangsu Hopefun Software, which fell -13.0%, Kweichow Moutai, which rose +2.35%, China Three Gorges Renewables, which fell -1.73%, COSCO Shipping, which fell -1.21%, Tongwei, which fell -0.16%, and CATL, which fell -0.99%.
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