China's factory output expanded for the first time in 11
months in November. But stock markets in the world's
second-largest economy fell on poor U.S. and eurozone
IShares FTSE China 25 Index Fund (
) -- the flagship ETF tracking the People's Republic -- fell
0.94% to 36.80. It's trading above both its 50-day and 200-day
moving average, which means it's in a solid uptrend. But its IBD
Relative Strength Rating of 63 and Accumulation-Distribution
Rating of D- (on an A to E scale) are rather weak. That means its
price action is outperforming 63% of the market, but institutions
are selling more shares than buying.
FXI has lagged global markets the past year and recently
overtook them. It's returned 12% in the past three months and 9%
year to date. By contrast,iShares Emerging Markets (
) gained 6% and 12% in those periods.
Guggenheim China Small Cap (
) slipped 0.67% Monday to 22.36. It's trading near an eight-month
high with a decent RS Rating of 74. It has a D Acc-Dis Rating.
HAO has rallied 20% the past three months and 17% year to
Guggenheim China Real Estate (
) rose 22% in the past three months and 53% year to date. It's
trading near a four-year high with robust 92 RS and B+ Acc-Dis
China's stocks have outperformed global markets recently
because of their low valuations, says Jason Hsu, director of
research at Research Affiliates in Pasadena, Calif., with $25
billion in assets.
Signs Of Improvement
The HSBC China Manufacturing PMI (Purchasing Managers Index)
index of overall business conditions registered a 50.5 in
November, up from 49.5 in October, owing to increasing new
business and expanding production. It marked the fastest rate of
expansion since October 2011. PMI index readings above 50.0 mean
improvement over the prior month, while readings below 50.0 mean
New orders rose for a second month, while export orders rose
for the first time since April.
"This confirms that Chinese economy continues to recover
gradually," Hongbin Qu, chief economist at HSBC, wrote in a
report. "We expect GDP growth to rebound modestly to around 8% in
Q3 as the (fiscal and monetary) easing measures continue to
Markit U.S. Manufacturing PMI rose to 52.8 in November -- its
highest level in six months-- from 51.0 in October. But overall
performance of the sector and job creations remains
"frustratingly weak," says Chris Williamson, chief economist at
"The boost in the figures can also be partly attributed to new
work resulting from Hurricane Sandy," Williamson wrote in a
report. "Alongside signs of renewed weakness in consumer
spending, (the manufacturing sector) suggests that GDP growth
will have slowed markedly from the 2.7% pace seen in the third
The Institute of Supply Management's manufacturing index fell
to a three-year low of 49.5 in November from 51.7 in October.
Markit Eurozone Manufacturing PMI rose to 46.2 in November, an
eight-month high, but below the threshold for expansion. Weak
demand and spare capacity pushed unemployment to 11.7% -- a new
eurozone high. Manufacturing output shrank for the ninth month
straight, though at the slowest pace since April.