Next Week in China: 30 June-4 July 2025

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Major Data Releases:

30 June: China’s National Bureau of Statistics to report Purchasing Managers’ Index (PMI) for June
30 June: Macau to report March to May employment data
1 July: Caixin to report China’s Manufacturing PMI for June
2 July: Hong Kong to report May retail sales statistics
3 July: Caixin to report China’s Services PMI for June

Next week will see minimal major data releases concerning mainland China, with only PMI-related data scheduled for publication. On Tuesday, 1 July, will be a public holiday in Hong Kong to celebrate its establishment, and financial markets will be closed.

For the June Manufacturing PMI, we anticipate a slight month-on-month decline to around 49. The emerging industries PMI (EPMI), a leading indicator, fell by 3.1 points month-on-month to 47.9. Historically, June is a seasonal lull for manufacturing, with the EPMI averaging a 1.1-point decline against the previous month over the years 2014 to 2024. This month’s drop slightly exceeded seasonal trends, marking the lowest June reading since 2014. Sectoral performance also softened, with only two of the seven emerging strategic industries remaining above the expansion territory of 50, compared to three growing segments in May.

New Materials and New Generation Information Technology led in absolute activity levels as the only sectors that are still expanding. New Materials has recorded the highest reading for two consecutive months, while New Generation Information Technology has led for four months. On a monthly basis, Bio-Industry rebounded after two months of contraction while other sectors slowed while New Energy and New Materials showed the strongest resilience. Notably, new energy vehicle production declined significantly more than demand, which may be linked to tighter payment cycles. This could help rebalance supply and demand in this space.

We can broadly divide the economy into two segments: “Traditional Industries” and “New Industries.” Since June, operation levels in traditional industrial sectors have diverged. Utilization rates in domestic demand-driven chains, such as steel and coking, were lower year-on-year and month-on-month compared to May while the chemicals industry chain posted a modest recovery. Although this divergence makes drawing broad conclusions challenging, electricity consumption data align with typical seasonal weakness in the industrial sector.

Examining fundamental indicators, namely the (1) high-frequency real estate sales data that show clear signs of retracement; (2) export sectors continuing adjustment patterns following the earlier frontloading effect in reaction to higher US tariffs; and (3) transitional phases in government subsidies, particularly for large-scale equipment renewal and consumer goods trade-in programs; are all likely to inject short-term volatility into durable goods consumption data. When viewed together with our analysis of trends in industrial activity, these observations collectively point to an expected decline in the June PMI reading for China.

In terms of equities, Chinese stocks are up week-on-week. As of Thursday, 26 June, the MSCI China Index increased by 2.95 per cent, the Shanghai Composite Index rose by 2.64 per cent, the Shenzhen Component by 3.38 per cent, and the ChiNext Index by 5.2 per cent. From a size perspective, small- and mid-cap stocks outperform large-cap stocks. Meanwhile, from a style perspective, value stocks continue to outperform growth stocks.

Looking ahead, as the A-share market begins its key earnings-preview window in mid-June, the influence of economic data and corporate fundamentals on the stock market is set to grow steadily. Segments likely to deliver standout results will become the primary leads for near-term structural moves. At the same time, market expectations for incremental, growth-stabilizing policies are rising, and the potential window for further stimulus between July to August also merits close attention.

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.