VIEW: In the wake of the official PMI's ING...>

CHINA: VIEW: In the wake of the official PMI's ING observe "that there are two

opposing trends in the m'fing sector, one for export-related industries, another

for infrastructure project related industries. These observations are also

evident in industrial production & FAI data. Export related orders, including

tech exports, e.g. semiconductors, have been falling due to the trade & tech

wars. In contrast to export orders, we expect that infrastructure-related orders

will rise after the funding is diverted to infrastructure projects. This is

indicated by the rising raw material price index (50.7 in July from 49 a month

ago). As long as China cannot import tech components (due to Chinese companies'

inclusion in US' entity list), it has to invest to develop its own, which will

also create domestic orders for electronic parts and goods. Eg. from the

National Statistic Bureau, computation equipment's PMI was above 51.0 in July.

We expect domestic demand will boost some parts of the m'fing sector. But it is

still too early to judge whether the m'fing PMI will overcome the contraction

trends and revert to a figure of 50 or higher, representing expansion.

Forthcoming activity data will shed more light on this question."