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ABN AMRO analysts point out that Asian manufacturing PMIs showed some improvement in September and these leading indicators dropped sharply since early 2018, but recently there are signs of a bottoming out.

Key Quotes

“Caixin’s PMI for China for instance rose to 51.4 in September, its highest level since February 2018. Taiwan’s PMI also improved in recent months, rising back to the neutral 50 mark. Even Hong Kong’s index, which dropped sharply in recent months on the back of the escalation of social unrest, improved a bit in September although remaining at very low levels. As EM Asia produces and exports many electronic products, for instance related to the manufacturing of iPhones, the global IT cycle likely plays a role here as well.”

“The PMI for global electronics equipment, an indicator for the strength of the global IT sector, looks to have bottomed. We should add that the signals from PMIs are still mixed, as China’s official PMI published by NBS improved only marginally and at 49.8 remains below the neutral 50 mark.”

“And the manufacturing PMI for Singapore, a country that is also exposed to the global IT cycle, dropped back to 49.5 in September (August: 49.9), remaining in contraction territory. What is more, services PMIs for China and India also lost ground in September, signalling that weakness in manufacturing may is spilling over to services.”