HSBC’s flash Purchasing Manager’s Index (PMI), due out tomorrow, is expected to show that China’s manufacturing sector contracted in October — slipping to a score of 49.8, when a score of 50 indicates expansion. The October slippage follows two months of growth, even though September’s score of 50.2 barely met the expansion threshold. According to Zhiwei Zhang, chief China economist at Nomura, “The slowdown is due to weak demand and rising interest rates.” The PMI rating will be the first indicator out for China’s fourth quarter, a period of time when the world’s second-largest economy is expected to contract further, as the temporary effects of China’s summer stimulus wear off. Investors in China may want to hedge their bets here…
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