Tim Seymour: The latest Chinese factory numbers came in over the weekend at 52.9 — weaker than expected and well below last month.
Consensus was for a full point higher, or 53.9, which would have been a significant improvement from the March PMI reading of 53.4.
Underlying exports were weaker.
Input prices remained elevated, but some easing is definitely underway in the face of multiple attempts to drain excess cash out of the Chinese economy.
Wall Street should focus on the forward-looking new orders sub-index, which dropped appreciably. This means less industrial activity down the road as new contracts dip.
As factory activity decelerates, sentiment could start leaning toward less aggressive rate tightening ahead — or at least a sense that we are nearing the top of the rate cycle.
This is good for regional markets. Watch India’s central bank today and tomorrow for insight into how that country is dealing with some of the worst inflation issues in the world.
In China, food prices are coming down again as the yuan appreciates.
For now, the worst seems to be behind us. Korean inflation is already softening, and in Indonesia it is the same scenario.
And needless to say, the WisdomTree Dreyfus Chinese Yuan ETF (NYSE:CYB) and Market Vectors Chinese Renminbi/USD ETN (NYSE:CNY) remain the ETFs to watch.
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.
About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.