Analysts at TD Securities point out that the China’s Caixin PMI dropped to 48.3 in Jan (consensus 49.6, last 49.7) and suggest that the data will not be well received by risk assets given the further drop into contraction territory.
Key Quotes
“This data highlights why China’s authorities are targeting small and private enterprises in terms of stimulus. These companies are much more exposed to an exports slowdown and have less liquidity to cope.”
“The data highlights the urgency to get a trade deal done, but is all the more disappointing as China and the US have now kicked the can down the road on the trade front. It is also noteworthy that China fixed the CNY weaker than expected today, supporting the view that the reason for a strong currency over recent weeks has been to placate the US ahead of trade talks. Now the talks are over, CNY may give back gains.”
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