The Chinese purchasing manager index has traditionally proven to be an important indicator of the country’s economy. In the months before the gust has swept across the economic landscape has purchasing managers have been able to point out that the brewing storm before this inserted fully.
– A surprise
The preliminary purchasing manager index, from July of submitted by business magazine Caixin, fell to 48.2 for the month of July. A measurement below 50 is an indication that the activity falls.
It was expected a slight decrease, but this is the lowest temperature measured at 15 months. The official index for July, August 3.
– The result of the preliminary purchasing manager index comes as a surprise to the market, which had expected an improvement, says a senior economist Dariusz Kowalczyk at Credit Agricole to CNBC.
Last week leave China until the economic growth statistics for the second quarter. These show that the world’s second largest economy had an economic growth rate of seven percent – exactly as Communist management had planned.
Some people have questioned the to these statistics, lodged a few weeks after the end of each quarter. USA, Japan, Germany and other economic powers need several weeks before they can submit preliminary statistics. It often comes several revisions.
– I think purchasing manager index reflects the negative impact stock exchange crash had a weaker outlook for personal consumption and a deterioration in the availability of capital for investment, says Kowalczyk.
The authorities have introduced a number of measures, including interest rate cuts and a reduction in banks’ reserve requirements, in the first half. It takes time for these measures when companies that need capital.
– There is no sign of stabilization in the industrial sector. Governments should take new steps to support the surrounding economy, including through increasing investment in infrastructure, says chief economist Xu Gao at Everbright Securities to Bloomberg News on Friday.
– No secure investments
The world’s hedge fund Bridgewater Associates, which manages 169 billion dollars (nearly 1400 billion) has turned completely around in his views on China, writes Wall Street Jorunal.
Previously Bridgewater among the absolute biggest Kina- optimists on Wall Street. But the strong turbulence in the Chinese stock markets in recent months has been the economists in the hedge fund to think about.
Now worries one in place for the economic development of the country, and believe the turmoil on the Chinese stock market will get broad and far-reaching consequences.
– Our view on China has changed. Now there are no safe havens, wrote Bridgewater-founder Raymond Dalio in a note to fund customers earlier in the week.
He is particularly concerned about the psychological effects stock slide may cause, pointing out that many private investors have huge losses because they came late into a bloated stock market.
– Even those who have not lost money on stocks will be affected psychologically, and these effects will provide a depreimerende effect on the øko0nomiske activity, wrote Dalio.
A spokesman for Bridgewater did not want to comment further fund changed outlook on China faced
WSJ.
Calls growth engines
China has been the world’s leading economic growth engine since the millennium – and especially when parts of the western world was hit by the financial crisis seven years ago played China a key role.
– China is no longer the global growth locomotive and this has implications for the business world. It also has implications for commodity markets, says chief adviser for economic issues for the insurance company Allianz to CNBC, Mohamad El-Erian.
El-Erian, who was CEO for bond company Pimco until last year, is worried and asks what areas of the world that will provide for financial help for the global economy.
BRICS countries, where Brazil, Russia, India, China and South Africa are included, will as a group provide limited growth.
– It is only India that looks good by these countries. If you look around the world there is no longer a dynamic source of economic growth, says El-Erian.
IMF warns Japan
It is almost three years ago Shinzi Abe launched the economic philosophy “Abenomics.” The overall goal for the Japanese prime minister has been creating inflation of two percent by the end of 2015. This deadline has been postponed a number of times.
The International Monetary Fund (IMF) comes with a warning to Abe. They believe that the planned measures must be initiated and implemented as soon as possible.
In the latest update on the Japanese economy writes IMF team that economic growth is very fragile and that the Japanese economy large front considerable risks and challenges.
The IMF believes that the Japanese government has no choice and must initiate structural reforms in the economy as soon as possible. The public debt in Japan is approaching 250 percent of gross domestic product. If nothing is done, it can rise to 300 percent until 2030.
IMF predicts that economic growth will fall by 0.8 percent in 2015 and 1.2 percent in 2016.
If the government does not manage to restart the reform process risking Japan stagflation, slower growth and are ill-prepared when it comes renewed turbulence in financial markets or a global recession.
markets
There’s decline at all Asian stock markets on Friday morning – except in China. Government intervention in the stock market following the sharp fall at the end keeps the activity and optimism high among investors.
Listed US companies are in the midst of earnings season. Several of the largest companies warn that Asia will contribute less to the bottom line than previously expected. It is particularly industrial companies who are severely affected.
Caterpillar, which had high activity thanks to building business in China and commodity boom.
“It’s continued economic weakness in China and Brazil and uncertainty Eurozone over Greece. Prices of commodities such as coal, iron ore and oil does not signal an improvement in the short term, “writes Caterpillar in the interim.
The price of North Sea oil has picked up slightly in Asian trading and is at 55.6 US dollars. The fall in the gold price has not yet stopped and is at its lowest level since the winter of 2010 – 1091 dollars an ounce.
Morgan Stanley commodity analysts believe the gold price could fall further and may end up at $ 800 for an ounce. The reason is a normalization of US interest rates, a solution to the Greece crisis and stock unrest in China.
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