China’s latest manufacturing data is providing more encouraging signals for investors, with improving factory activity creating selective opportunities across industrials, technology and commodities, according to Lale Akoner, Global Market Strategist at etoro.
China’s private manufacturing Purchasing Managers’ Index (PMI) rose to 51.5, beating expectations as output, new orders and exports accelerated. A reading above 50 indicates an expansion in manufacturing activity.
Commenting on the latest figures, Akoner said:“China’s factory data is finally giving investors something more encouraging to work with. The private manufacturing PMI rose to 51.5, beating expectations as output, orders and exports accelerated.
“In terms of investments, we think that this supports a selective view on Chinese industrial and technology exporters, automation and semiconductor supply-chain companies, as well as copper and diversified miners exposed to stronger factory demand.
“However, the official PMI remains below 50 and price discounting continues, pointing to weak domestic demand and pressure on margins. This still looks more like a manufacturing recovery than a broad Chinese economic rebound, favouring targeted sector exposure over the wider market.
“We think that a more sustained rally will require stronger consumer demand, improving profitability as well as further policy support.”
The divergence between stronger private manufacturing data and the weaker official PMI suggests that China’s recovery remains uneven. While improving factory activity could support export-oriented companies and sectors exposed to industrial demand, continued weakness in domestic consumption and corporate margins remains a constraint on the broader outlook.
For investors, the latest figures therefore point toward a more selective approach to China, with export-oriented technology and industrial businesses, automation and semiconductor supply chains, and commodities linked to manufacturing demand potentially better positioned to benefit from the current recovery.
