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Mitul Kotecha, Senior Emerging Markets Strategist at ING, explains that the latest EM manufacturing PMI data for September reveals an overall deterioration in sentiment driven in particular by EMEA.

Key Quotes

“Our GDP weighted aggregate PMI index is at its lowest in two years.”

“Asia’s aggregate PMI drops due to China, but ex-China shows an improvement. In the region China and Taiwan drop most, while Korea increases. All remain in expansion territory but export orders are increasingly feeling the strain.”

“EMEA PMI looks particularly weak, with Hungary, Poland and Turkey dropping, the latter particularly sharply.”

“Russia PMI and South Africa (Standard Bank) PMI both moved higher, but the latter remains below 50 where it has been for the last three months.”

“Latam PMI continuing its steady recovery, helped by an improvement in manufacturing sentiment in Mexico. Brazil’s PMI has fared the worst with manufacturing sentiment moving back towards contraction.”

“CNY remains the most growth (PMI) sensitive currency, with its weakening PMI corresponding with a weaker CNY. HUF and BRL track closely behind. On the other hand PLN and PHP register relatively strong negative correlations to their respective PMIs.”