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Greg Gibbs, analyst at Amplifying Global FX Capital, notes that Chinese equities have been rising sharply since the beginning of the year, reversing much of their underperformance of other regional equities over the last year.  

Key Quotes

“Surging Chinese equities seems at odds with the weaker manufacturing PMIs.   It reflects a number of specific measures designed to shore up the equity market; including measures to ease credit tightening for private sector companies.”

“The rebound in Chinese equities may also reflect increasing optimism of an easing in trade tensions with the US.   If so, the Chinese equity market may be predicting a recovery in Chinese and regional PMIs in the coming months.”

“However, the further surge in Chinese equities in the last two weeks has not been matched by other Asian equities.   Korean and Taiwan equities have ebbed in recent weeks, which is more consistent with soft PMI readings.”

“India’s equity market has been one of the better performers, consistent with the PMI data suggesting that the Indian economy has been able to buck the weaker PMI trend in the region, less affected by the disruption in global trade.”