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China manufacturing

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What's going on?

Official data out on Monday showed China’s manufacturing industry shrank in September. It could really do with picking up soon: this is the fifth drop in a row.

What does this mean?

A survey asking Chinese manufacturing firms – which represent about 40% of the country’s economy – how busy they’d been in September actually beat economists’ predictions. But it also showed activity in the sector is continuing to shrink, as it has done since May. The seemingly never-ending trade war with the US is partly to blame: import taxes (a.k.a. tariffs) have made Chinese goods more expensive for Americans, who are instead buying from Vietnam, Korea, and Mexico.

And things could be about to get worse. Late last week, America was reportedly considering limiting how much US investors could invest in Chinese markets. A half-hearted denial over the weekend eased the tension somewhat, but the threat still stands. Chinese markets are closed for the next week as the country heads on vacation: maybe the rest will do everyone some good.

Why should I care?

For markets: Thank you for your services.

At least poor manufacturing results were made up for by decent activity in the services sector: activity grew, albeit slower than in August. Factory owners might be looking enviously at TikTok-parent ByteDance, which reportedly made more money in the first half of 2019 than in all of 2018. Most of that came from its news app and Chinese TikTok-equivalent. Expect a further boost as the true-blue TikTok starts to sell more ads.

The bigger picture: The grass really is greener.

Things were better still on the other side of the water. In Hong Kong, the world’s largest beer-brewer AB InBev opted for champagne after selling shares of its Asian business. The second-biggest IPO of the year raised $5 billion for the company, and investors were duly rewarded: shares rose by 4% on the first day of trading. There you go, WeWork: a delayed IPO doesn’t have to be bad news…

Originally posted as part of the Finimize daily email.

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