More Stimulus Measures Seen As China Factory Data Falls
Marcel Woo | | May 04, 2015 10:04 AM EDT |
An employee welds the exterior of a vehicle along a production line at a factory in Qingdao, Shandong province. The HSBC / Markit Purchasing Managers’ Index (PMI), which measures China's factory activity, dropped to 48.9 in April, the lowest reading since a year ago. REUTERS
China's weak manufacturing data has again revived talks that the central Chinese government could soon announce more stimulus measures to keep the economy from further slowing down.
The HSBC / Markit Purchasing Managers' Index (PMI), which measures factory activity at the world's second-largest economy, dropped to 48.9 in April, the lowest reading since a year ago, sending economists and analysts to believe that Beijing is on its way to unveil further support measures.
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A reading PMI reading below 50 means factory output has contracted while a reading above 50 signifies expansion.
The latest factory figure was lower than a preliminary reading of 49.2 and weaker than what economists predicted in a survey before the HSBC / Markit PMI was released.
While the report of the lackluster PMI immediately triggered the fall of Asian stocks in early Monday trading, the reinforced view that China will announce stimulus measures make investors excited, sending the stocks edging up at market close in the region.
At Monday's market closing, the Shanghai Composite Index gained 0.90 percent while the MSCI Asia ex Japan Index also gained 0.3 percent while the overall MSCI China was up 0.13 percent.
Analysts believe it is just a matter of time that China will announce a fresh round of stimulus measures to ensure that the economic growth will not slow from the 7 percent annual growth pace posted in the first quarter of this year.
Lackluster factory figure is just one of the many woes that the Chinese economy is facing. The country is also trying to cope up with a property market downturn, slowing investment, and rising levels of domestic debt.
Global financial professionals have also warned investors to avoid China over the next 12 months, a survey conducted by Bloomberg showed.
China, which was considered as a top market for investment in recent years, is now considered as one of the worst markets to invest in, joining Russia and Brazil, the survey revealed.
About 60 percent of respondents in the Bloomberg survey depicted China's economy as deteriorating, flagging the world's second-largest economy, along with Brazil and Russia, as markets to avoid within the next 12 months.
Europe has overtaken China to become the best place to invest in, the survey result showed.
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