China's monthly purchasing managers index covering the manufacturing sector released on Friday showed some further improvement in activity

John Robertson

PortfolioDirect

China's monthly purchasing managers index covering the manufacturing sector released on Friday showed some further improvement in activity. The improvement, slightly ahead of where commentators expected the result, is probably enough to validate the recent strengthening in resource sector equity prices but not enough to generate extra momentum. The Chinese activity rate still appears to rely too heavily on government measures, high growth in lending and maintenance of a high proportion of investment spending in the total spending mix. In the shorter term, sourcing growth in this way helps support interest in the resources sector and eases cyclical adjustment pressures but also implies an ongoing risk as long as the inevitable adjustments facing the Chinese economy are still to be confronted.


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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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