Caixin China Manufacturing Sector Hits 13-Month High, Signaling Economic Recovery – iShares MSCI China ETF (NASDAQ:MCHI), iShares China Large-Cap ETF (ARCA:FXI)

In a significant turn of events, China’s manufacturing sector showed robust growth, marking a promising sign for the global economy.

What happened: Caixin Global reported Monday that the Caixin Chinese Manufacturing Purchasing Managers Index (PMI) rose to 51.1 in March from 50.9 the previous month, marking the fastest pace in 13 months. This expansion reflects growth in both domestic and foreign demand, highlighting a sustained recovery.

This is the fifth consecutive month of expansion, as values ​​above 50 indicate growth.

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This reading confirms official data which exceeded market expectations and reached the strongest level in 11 months. Another official survey of non-manufacturing activity in China recorded the strongest reading since June.

That of China National Statistics Office released survey data on Sunday showing the country’s official manufacturing PMI stood at 50.8 in March, its strongest reading since March last year, which was also stronger than expectations of 49.9 in a Reuters poll.

This surge follows a series of positive economic data, including exports and retail sales, which point to a strong start for the Chinese economy in 2024. In response, Citi upgraded its growth forecast for China to 5, 0% from 4.6%, citing recent positive data and policies. implementations.

At the Chinese parliamentary meeting in March, Premier Li Qiang set an ambitious economic growth target of around 5% for 2024. However, analysts warn that achieving this goal may require further stimulus, especially given ongoing challenges in the real estate sector, according to Reuters.

Because matter: The PMI survey highlighted an acceleration in manufacturing production and new orders, with external demand also increasing. This led to the highest level of new export orders since February 2023.

Business confidence about the future reached its highest level since April 2023, supported by factors such as lower production costs. Wang Zhesenior economist at Caixin Insight Group, noted that lower commodity prices have allowed manufacturers to reduce production costs and prices in competitive market conditions.

Despite these positive signs, companies remain cautious about expanding their workforce, with the employment sub-index remaining negative since August last year. Wang also highlighted ongoing economic challenges, including weak employment and low prices, underscoring the need for further stimulus to revive demand.

Price Action: Among the ETFs that contain Chinese stocks, iShares MSCI China ETF MCHI has increased marginally by 0.05% since the beginning of this year, while iShares China Large Cap ETF FXI it has gained 3.57% so far this year.

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