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Chinese stocks should POP higher today on Manufacturing in China Expands for 6th straight month.



September 30, 2009 – Comments (2)

Chinese stocks listed in USA:

China Manufacturing Expands a Sixth Month, PMI Shows (Update2)

By Bloomberg News

Sept. 30 (Bloomberg) -- Chinese manufacturing expanded for a sixth month in September on government stimulus spending and record bank lending in the first half of the year, a purchasing managers’ index released by HSBC Holdings Plc showed.

The index dropped to a seasonally adjusted 55 from August’s 16-month high of 55.1, HSBC said in an e-mailed statement today. A reading above 50 indicates an expansion.

Premier Wen Jiabao said Sept. 10 that it’s too early to withdraw stimulus measures that are countering a slump in exports. China’s State Council announced yesterday bans on building aluminum smelters for three years and the expansion of the steel industry for an unspecified period to prevent overcapacity problems undermining the recovery of the world’s third-largest economy.

“China’s economic activities will continue to accelerate and further cement the nation’s recovery,” said Xing Ziqiang, an economist at China International Capital Corp. in Beijing. “Exports may soon start to rebound as the U.S. and Europe emerge from recession.”

The yuan traded at 6.8268 against the dollar as of 2:36 p.m. in Shanghai, from 6.8275 before the data were released.

An output index fell to 57.6 from 58.4 in August, a measure of new orders declined to 58 from 59.3, and an export-order index dropped to 54.4 from 54.9. The employment index rose to 53, the highest level in 25 months, on climbing sales, HSBC said.

Cement, Coke

The government has this year highlighted overcapacity as one of the nation’s biggest problems. The detailed measures announced yesterday also include a temporary halt to new cement projects and a ban on expanding coke projects for three years.

The State Council’s warning that overcapacity has the potential to undermine the nation’s recovery contrasted with the positive signs from the PMI.

“New business growth remained substantial, signaling that the recovery in demand from both domestic and external sources is well on track,” said Qu Hongbin, chief China economist at HSBC in Hong Kong. “Rising employment in the manufacturing sector is even more encouraging because it suggests that China’s infrastructure-led recovery is starting to spread over to the consumer sector.”

BASF AG, the world’s biggest chemical producer, and China Petroleum & Chemical Corp. this week started to build a $1.4 billion chemical plant in Nanjing to meet rising Chinese demand.

Cars, Houses

The nation’s industrial output gained the most in a year in August as passenger-car sales almost doubled and house sales jumped 70 percent. Urban fixed-asset investment rose 33 percent in the first eight months as new loans jumped to a record $1.2 trillion.

Exports fell for a 10th month in August, declining more than economists forecast, highlighting Premier Wen’s concern that China’s recovery is “unbalanced” and not solid. The State Council, the nation’s cabinet, on Sept. 22 pledged more loans, tax cuts and government procurement to help small and medium- sized businesses weather the financial crisis.

“The government is expected to maintain its supportive policies, while targeted adjustments may be used to control certain sectors where overheating is a concern,” said Jing Ulrich, head of China equities in Hong Kong for JPMorgan Chase & Co. “Broad-based macroeconomic tightening will only materialize with greater inflationary pressure and a significant recovery in exports.”

Tomorrow’s PMI

The HSBC PMI is based on replies to questionnaires sent to purchasing executives at more than 400 manufacturing companies.

A government-backed purchasing managers’ index will be released by the Federation of Logistics and Purchasing at 9 a.m. local time tomorrow. The index may have risen to 55 in September from 54 in August, according to the median estimate of 13 economists surveyed by Bloomberg News.

China’s manufacturing growth adds to positive signs around the world. Confidence in the global economy held at a record high this month, a Bloomberg survey of users on six continents showed Sept. 17.

In the U.S., the Federal Reserve indicated last week for the first time since August 2008 that the nation’s economy is accelerating, while the European Commission forecasts a return to growth in the euro-area economy this quarter.

European Central Bank President Jean-Claude Trichet said yesterday that it is too early to start withdrawing unconventional measures and declare the global crisis over.

--Li Yanping. Editors: Paul Panckhurst, Stephanie Phang.

To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or

Last Updated: September 30, 2009 02:37 EDT



2 Comments – Post Your Own

#1) On September 30, 2009 at 9:27 AM, IBDvalueinvestin (98.74) wrote:

Chinese stocks already popping higher on Chinese manufacturing data today.

Up in Pre-market are 

FUQI +0.96

CGA +0.40

CISG +0.42

RINO +0.29

Stocks to watch at the open:  CTFO, CPBY, JST, HRBN, TRIT


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#2) On September 30, 2009 at 9:39 AM, lemoneater (58.46) wrote:

I will show my ignorance, but will this lift Asian stocks as a whole? I have (TSM) Taiwan Semiconductors and (CAJ) Canon.

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