Next Week in China: 28 October-1 November 2024

Major Data Releases:

• 30 October: China to report third quarter revenues of national cultural and related industrial enterprises above designated size
• 31 October: National Bureau of Statistics to report China’s October Purchasing Managers’ Index (PMI)
• 31 October: Hong Kong to report advance estimates on Q3 GDP performance
• 31 October: Taiwan to report advance estimates on Q3 GDP performance
• 01 November: Caixin to report China’s October PMI

It will be another quiet week in terms of major economic data releases for China.

Looking at high-frequency data from October, economic growth is showing initial signs of recovery. Coupled with the month-on-month improvement in the broad-spectrum industrial product price index, nominal GDP for the July-September period should be indicating a preliminary rebound. Additionally, the entry points for this round of countercyclical policies are quite accurate, the subsequent effects of which merit continued monitoring.

Regarding the manufacturing PMI, we expect further recovery from September’s figure. Last month, the PMI rose by 0.7 percentage points to 49.8, marking its first increase in six months, though it remains below the expansion threshold. Meanwhile, the Emerging Industries PMI (EPMI) for October increased by 1.2 points month-on-month to 54.5, indicating that the activity in emerging industries has been continuously improving since the low point in July and August. Additionally, the operating rate of traditional sectors in the first two weeks of October has mostly improved compared to the previous month.

Major stock market indices showed mixed movements week-on-week. As of Thursday, 24 October, the MSCI China Index decreased by 1.60 per cent. Meanwhile, the Shanghai Composite Index increased by 0.57 per cent and the Shenzhen Component Index rose by 0.81 per cent, while the ChiNext Index went down by 0.91 per cent.

Looking ahead, there is a higher probability that growth will outperform expectations due to the anticipated impact of monetary and fiscal policy support from the Chinese government, additional liquidity, and increased risk appetite. However, we note that it will take time for these changes in policy attitudes to translate into the improved performance of listed companies.

This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.