South Korea’s factory activity contracted at a faster pace in August, according to private surveys by S&P Global. The country’s manufacturing purchasing managers index fell to 48.9 from 49.4, marking the 14th straight month where the PMI has remained below the break even level of 50. A PMI reading above 50 represents an expansion, while a reading under 50 represents a contraction in the sector. This decline in factory activity is a concerning sign for South Korea’s economy.
Similarly, Japan’s factory activity also contracted for a third straight month in August, according to private surveys by the au Jibun bank. The country’s manufacturing purchasing index came in at 49.6, slightly lower than the 49.7 in the flash estimates last week and unchanged from the July figure. “Weak client confidence and subdued economic conditions reportedly weighed on new orders, though some firms mentioned that new product launches had partially offset the decline,” the bank said in a report. This prolonged period of contraction raises concerns about Japan’s economic recovery.
In China, the People’s Bank of China announced a cut to the foreign exchange reserve requirement ratio for financial institutions, reducing it from 6% to 4% starting from Sept. 15. This move follows a series of interest rate reductions in recent weeks as China tries to stimulate its economy. The central bank also set the midpoint of the yuan against the U.S. dollar slightly stronger. However, the offshore-traded yuan weakened further against the greenback. These measures reflect China’s efforts to boost its economy amid global economic uncertainties.
Amidst all this economic news, CNBC Pro highlights that September has historically been a challenging month for stocks. With August already a volatile month, investment professionals are sharing their trading tips and suggestions on what stocks to buy. Dividend stocks are also being discussed as an investment opportunity, despite their underperformance this year. One fund manager argues that investing in dividend stocks over a longer period can pay off.
In Hong Kong, financial markets have halted trading as Super Typhoon Saola approaches. The Hong Kong Exchanges and Clearing Limited (HKEX) announced that if a Storm Signal No.8 or above remains issued, the morning trading sessions will be cancelled. The Hong Kong Observatory expects the weather to deteriorate rapidly, and the No. 8 signal is expected to remain in force for most of the day.
Lastly, the Nasdaq Composite and Nasdaq-100 recorded their worst month since December 2022. Technology stocks faced significant challenges in August, with the Nasdaq Composite slumping about 2.2% and the Nasdaq-100 finishing 1.6% lower. Software stocks, such as Fortinet and Datadog, took a significant hit, along with JD.com, Lucid Group, and PayPal.
Overall, these developments in South Korea, Japan, China, and the global stock markets indicate a challenging economic environment with potential implications for various industries and investors globally.