With the recent improvement in China’s PMI and now leading indicators, the worries over the Chinese economy might be a bit exacerbated (via Nomura):
· Our China leading index picked up further in October, with five of the nine components improving (Bloomberg ticker: NMEICLI).
· On a 3-month moving average basis, 58% of the indicators in our heatmap, which tracks 31 indicators, were positive in October, up from a revised 49% in September.
· These results provide further support to our out-of-consensus view of GDP growth rebounding to 8.4% in Q4 2012.
Nomura’s China leading index (CLI) improved for the second consecutive month in October, after a continuous decline from April to August (Figure 1). Five of the nine components registered positive growth in October, led by production of chemical fiber and metal-cutting machines.
Source: Nomura Securities