This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Global Macro: Weak Chinese Data Slam Emerging Markets

NEW YORK (TheStreet) -- Weak Chinese economic data have sent iShares MSCI Emerging Markets  (EEM) lower.

The Chinese manufacturing figure -- the HSBC Purchasing Managers' Index, released early Thursday -- came in at 49.6 for January, versus an expected 50.6. Any number below 50 indicates contraction in the manufacturing sector and furthers the belief that the Chinese economy is slowing down.

Weak Chinese economic figures are now seen as a developing trend. At the beginning of January, numbers for Chinese manufacturing and services sectors came in well below expectations, which was especially surprising given that those sectors outperformed expectations in the U.S. and Europe. 

Meanwhile, Chinese growth figures reported last week confirmed fears about a slowdown in China, as gross domestic product growth for 2013 was reported at 7.7%, getting closer to an important threshold of 7%. The growth rate in China has been gradually declining the past few years, and many believe that once the rate falls below 7%, the country will officially be slowing down.

Weakness in China hurts emerging markets which rely heavily on Chinese demand for their countries' resources.

The emerging-market equity index, pictured below, formed a large head-and-shoulders pattern from September till earlier this month. The catalyst for a break lower came from weakening Chinese economy and higher U.S. interest rates.

The index looks to be in a strong downtrend and could continue to move lower until China reverses its economic sluggishness.

EEM ChartEEM data by YCharts

At the time of publication, the author had no position in the fund mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
EEM $40.41 -0.66%
AAPL $128.51 -0.45%
FB $78.77 -1.20%
GOOG $569.27 -0.36%
TSLA $196.88 -0.23%

Markets

DOW 18,153.26 -135.37 -0.74%
S&P 500 2,100.12 -17.27 -0.82%
NASDAQ 4,961.5040 -46.5920 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs