China PMI beats expectation

Today China HSBC manufacturing PMI data was released at 1:45 GMT.

• Data print showed, manufacturing PMI expanded to 50.1 over expectation of 49.5

• The data pointed that manufacturing expanded after consecutive slack of two months. December reading was 49.6 & for January 49.7

• The data is a preliminary one and focusing more on the smaller sectors. The final data will be vital to watch for along with the PMI data published by the state.

Analogy -

• This upbeat data should be taken with caution as it could be more of a seasonal effect. 

• China celebrated its long steak of New Year holidays and markets were closed until today. It is not unusual for the manufacturers to increase production and hoard inventory in anticipation of better sales over New Year.

• China is still experiencing slowdown as the Government is trying to make China's growth more consumption oriented than an export oriented one.

• China also suffering from opaque public finances, over heated real estate sector & shadow financing deals.

China's slowdown is to continue as well as the policy ease by Peoples Bank of China (PBOC).Equity market is expected to perform well despite short term correction, until any severe collapses occur in the shadow financing sector.

CSI 300 is currently trading at 3221, down 0.82% for the day. The index has returned near 50% since October 2014.