China's economy is in a fragile state, underscored by today's factory activity data. November manufacturing PMI came in at 49.4 and has stayed in contraction territory since April (below 50), with the exception of just one month. Things have been less dire on the services sector, but today's 50.2 print in the non-manufacturing PMI, marked the worst performance of the year.
The country also grapples with deflation, with CPI shrinking by 0.2% in October, while the property sector is in distress. Other releases have been more encouraging though, as retail sales and industrial production are robust, while the economy has grown by a solid 5.2% in the first three quarters of the year. The uneven data may be a sign that the government's supportive measures are having some effect, but they also show that more generous stimulus is needed to promote the post-pandemic recovery.
HKG33 is having a mixed November, which is encouraging after the significant losses of the previous three months. However, that is still a poor performance given the rally seen in the US, Germany, Australia, Japan and other key stock markets. HKG33 stays on the back foot today after the poor PMIs, on the verge of new 2023 lows (16,856), which keep 16,127 in the spotlight. On the other hand, the drop looks overextended and the Hong Kong index tries to find some reprieve. As such, we can see a recovery effort, but the upside remains unfriendly and strong catalyst would be required for reclaiming the EMA200 (at around 17,600).
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.