The week opening for the Chinese Hang Seng Index was weak, and futures (HK.cash) are dropping almost -1.1% today, as official, state manufacturing PMIs reading for August came in the weakest since 6-months, and continue to drop 4-months in a row. Also, mainland CSI slid -1.2% pressured by macro concerns. China Manufacturing PMI for August came in 49.1 vs 49.4 in July.
- Analysts expected a rebound to 49.5, and the thesis was a little supported by such factors as fast-dropping copper inventories on the Shanghai exchange (with lower exports). However, now investors see that China exports are still-strong (as global economy conditions are solid) while domestic demand is weak or at least not high enough, to support Chinese business valuations, among the geopolitical risks.
- On the other hand, the non-industrial PMI reading rose from 50.2 to 50.3 in July, and according to private-agency Caixin, the manufacturing PMI was 50.4 vs. 50 forecast and 49.8 the previous month. However, investors focused their attention on the official, weaker than expected data. The fact is, that uncertainty across the China economy trend persists, and even 'mixed' data are 'weak' for the markets, as investors want to see stronger macro, after a buch of 'stimulus' actions from PBoC.
- Hang Seng drops, despite investors awaiting Fed rate cut on September 18. Chinese developers dropped today mostly, as one of the largest companies in the country, New World Development plunged 14%, after quarterly earnings report and expected $2.6 billion net losses this year (first time since 20 years). However, Caixin research signals 'modest growth' among Chinese economy; factory activity according to the agency grew modestly among smaller manufacturers last month, while export orders offset weakening Chinese consumption.
HK.cash, D1 interval
As we can see on the chart, HK. cash plunged today below SMA100 and if bearish sentiments persist, the SMA200 test (the red line) near 17,000 points cannot be excluded in the near term. The index rise above 18,000 points has ended with sell-off and 'gravestone doji' candlestick, potentially bearish pattern.
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Source: xStation5
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