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China February manufacturing falls to 35.7, lowest on record. Composite at 28.9

😬
Question: Where are we?
Answer: We are here: manufacturing at 35.7, worse than 45 expected & below 50 is contraction & worse than the GFC.

👇🏻👇🏻👇🏻😬
Here it is relative to historical & including non-manufacturing (services), which fell to 29.6 from 54.1 & 50.5 expected (expectations OFF). Composite even worse at 28.9 from 53.

This is what it looks. Historical low. 👇🏻👇🏻👇🏻
Note that services have just done something rather unprecedented here: IT FELL below 50 by a long shot to 29.6. During GFC, it was still above 50 (expanding) offsetting declining manufacturing.

This time, both manufacturing & services contracting & SERVICES WORSE!
Note that this is in line w the high frequency trackers people have been doing w/ railway passenger, real estate sales, etc.

This # will be followed by Caixin #s on Monday. These #s are watched closely & they are soft indicators as hard indicators are lagged.
When I say lagged, I mean it's not being released for a while so this is all we get for now regarding activity & very clear here that there is a big dive.
Btw, Vietnam trade data OFF THE CHART for February - note that Foxconn & Samsung E etc all were ramping up capacity in Vietnam as China went under lock-down in February.

So u can see the inverse of China PMIs data & Vietnam's ramping up of activities.
Doesn't mean that Vietnam is not impacted by what's happening in China (very exposed via intermediates) via both supply & demand side.

Story of Vietnam being an arbitrage for China concentration risks will become even more intense as VN has 1 thing China doesn't have - EU FTA!!!
There are other reasons to go to Vietnam as well such as cheap labor, no trade-war w/ the US, cheap electricity, still close to China but less risks. Note only so much u can do w/ the Vietnam story as small. That said, will benefit when this blows over.

open.spotify.com/episode/10jbNZ…
Above is the podcast that discusses the supply chain impact of the corona virus on China's activities &look at LABOR as the key shock for the supply chain (also demand). It expands beyond China into the exposure of other nations, such as Vietnam & reveals the cracks to VN's model
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Trinh Nguyen
@Trinhnomics
Good morning! Equities not divorced from earnings (don't say I did not warn u!!!) Even just the supply chain impact from China alone is already massive let alone the demand side of things. Btw, SPX price to earnings ratio was 24 three days ago & today 19.6!

Not a rounding error.
Let me say this in a different way, u may rally gradually over time to get to the peak but on the way down, the FOMO trade reverse VIOLENTLY b/c everyone trying to exit at the same time.

Look at performance ytd of equities. 3 days to take us to -7.8%. 3 days...
Nikkei -3% today taking it to double digits loss year-to-date. Note that Japan (and South Korea) likely to be the most impacted by this b/c they are very globally exposed (investment in mainland China + investment in Southeast Asia + now onshore shocks).

But what about China?
Read 8 tweets
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Trinh Nguyen
@Trinhnomics
This is what fear looks like. Biggest movers of assets this year:

Commodities moved the most & they moved 1st while equities were still in denial - look at that double digits decline of oil & gas

US 10yr -52bps already

US equities erased all ytd gains on just 2 days of losses
Questions for you & btw volatility is your friend:
a) Are commodities better at pricing impact of coronavirus on global demand???
b) Will equities catch up???

As in, are we correctly pricing risks/asset prices at the moment??? Where is the mispricing?
Asian market movers in 2020 so far.

Equities: Biggest losers are Thailand, the Philippines, Indonesia, & Vietnam
FX: Baht, Australia (proxy for China), Korea KRW, Malaysian ringgit
Sov bonds: Indo, PHP, AU
CDS: Thailand & Korea
Read 9 tweets
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Trinh Nguyen
@Trinhnomics
So that should cover basic China trade issues. Btw, about 40% of Chinese exports are by foreign invested entities so it's not just Chinese firms but also a lot of foreign firms involved in the manufacturing trade in China.

What has happened w/ the virus? How does that matter?
On 23 January (note that just before Lunar New Year where people about to take 1 wk off), China locked down Wuhan. Soon enough, partial lock-down rest of China. People gripped w/ fear avoided public places & so not only that province stopped working, the rest operated sub-optimal
How sub-optimal u ask? Well, an entire Hubei Province was shutdown. The rest as a whole remained rather shut. Some data to indicate: autos down ~-90%; railway passenger ~-80; real estate sales ~-80, air traffic etc.

Since the infection has slowed ex Hubei, normalization BUT...
Read 27 tweets

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Eunice Yoon
@onlyyoontv
Holy moly. I had to do a double take 👀. #China’s factories activity plunges, worse than global financial crisis in 2008/9.
-Manufacturing PMI lowest on record at 35.7 (v. est 46, Jan 50)
-Non-manufacturing PMI at 29.6 (v. est 50.5, Jan 54.1)
-Composite PMI at 28.9 (v. Jan 53)
Again, this is why investors are panicking. The dramatic slowdown is the impact of #coronavirus on #China’s economy- and a window at what can happen in other countries depending on virus spread and government responses. More data to be released out of China this week. 😓🙏
Next indicator for us in #China: @caixin #manufacturing PMI due on Mon: est. 45.7 (v. Jan 51.1). 50 is # dividing contraction v. growth. Caixin survey tracks private, smaller firms versus official PMI which follows larger, often state, manufacturers. #coronavirus #supplychain
Read 6 tweets
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IndoPacific_SCS_Info
@IndoPac_Info
#China’s targeting of the #NBA shows why it may fail at building soft power and the Chinese dream - By narrowing the boundaries of commentary, China is gradually alienating outsiders who might see opportunities there scmp.com/comment/opinio…
Xi Jinping is doing to foreign businesses what it has long done to domestic dissenters: punishing those whose words stray outside ever-narrower red lines. In attacking the NBA, which does not need China and would be difficult to replace, Beijing may have finally gone too far
The NBA controversy put the spotlight on Hong Kong & makes it more likely that the Hong Kong Human Rights and Democracy Act will pass. No other state would think of doing what China has done. This is behaviour unworthy of a proud, confident country with 2,000 years of statecraft.
Read 4 tweets
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MissMAGA2016
@MissMaga2016
#China / the CCP created a white list of people they want to reward for shilling for China and overlooking their human rights abuses.

They didn’t name names, but said the people who signed an open letter to Trump & Congress would “be viewed favorably.”

washingtonpost.com/opinions/2019/…
ICYCR:

archive.fo/Jmb7U
That open letter is here and people who signed it include several Brookings members, several Johns Hopkins University members, former US ambassadors to Russia & Brunei, someone from Kissinger Institute, and some from CFR among others.

archive.fo/u5TpB
Read 3 tweets
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Christophe Barraud🛢
@C_Barraud
🇨🇳 #China will cut export rebate rates to 13% and 9%, respectively, for exports that enjoyed 16% and 10% rebate rates in accordance with value-added tax cuts effective April 1, according to a statement from the Ministry of Finance.
*Link (Chinese): bit.ly/2Tr5h3o
🇨🇳 #China is extending a public holiday to get people to travel and spend more as the government pins its hopes on a vast consumer base to help cushion an economic slowdown - Reuters
reuters.com/article/us-chi…
🇨🇳 #China Regulator Says Financial Markets Can Open More Quickly - Bloomberg
bloomberg.com/news/articles/…
Read 167 tweets
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IndoPacific_SCS_info
@China_SCS_info
#China plans to sell #Pakistan an aircraft carrier and integrate it militarily - I believe a carrier for Pak is far fetched, but the article is very revealing about CN plans for Pak, something that usually gets dismissed @desertfox61I @avarakai sundayguardianlive.com/news/china-pla…
Beijing is increasingly integrating Pakistan into its military system to fulfill its global ambitions. Meanwhile, India refuses to sell Brahmos to Vietnam for fear of upsetting China. China is not reciprocating India's actions. #Huawei is allowed to bid for the 5G network.
Conscious Western efforts to retard its growth & access to hi-tech supply chains, Beijing has adopted an overtly benign tone with its neighbors. These are, however, cosmetic tactical measures & China’s ambition of developing “a kind of military force system” has not changed.
Read 13 tweets
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Christophe Barraud🛢
@C_Barraud
🇨🇳 #CHINA Q3 GDP Y/Y: 6.5% V 6.6%E (slowest growth since Q1 2009)
*NBS spokesman Mao Shengyong said that the international situation was bringing “downward pressure” on China.
*Link: bloom.bg/2RVX1ZA
🇫🇷 🇪🇺 🇨🇳 French tire maker Michelin warned of declining sales in Europe and #China in the second half of the year, dragging down shares of its competitors in the U.S. and Europe - Bloomberg
*Statement: bit.ly/2EujhqH
🇺🇸🇨🇳🇪🇺 In a volley of filings, the EU, #China and the U.S. this week escalated disputes over new U.S. metals tariffs, the European response to those levies, and Chinese intellectual property practices - Bloomberg
bloomberg.com/news/articles/…
Read 634 tweets

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