Mitul Kotecha, senior emerging markets strategist at TD Securities, notes that asia’s manufacturing PMIs registered broad based increases in December, with four (Singapore, Taiwan, South Korea, and Thailand) out of nine PMIs moving from contraction to expansion (>50) over the month.
Key Quotes
“One (Malaysia) moved from contraction to no change (50). Our overall composite GDP weighted PMI moved to its highest since Mar 2018, while the average of the PMIs rose to its highest since Oct 18. Our Asia ex-China PMI indicator moved into expansion for the first time since May 2019.”
“Overall, the PMIs add further evidence of a stabilization in Asia’s economies, placing the region on a better footing into early 2020. While at least part of this can be attributed to the US-China Phase 1 trade deal (which has yet to be signed) and some front loading ahead of Lunar New Year holidays, we expect further gradual improvements in the months ahead supported by easier monetary and fiscal policy, de-escalation in the US-China trade war and a lower base.”
“The country breakdown revealed that India recorded the biggest increase, with the highest reading among Asian countries at 52.7. While Indonesia’s PMI also recorded a large gain, it is the only country in the region still registering contraction in manufacturing.”
“China’s PMI remained in expansion at 50.2 in Dec, with the components generally upbeat. SGD, INR & CNY benefit most from gains in their respective manufacturing PMIs.”
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