Chart of the day: China consumer stocks power ahead
China’s stock market has turned more defensive since the beginning of the fourth quarter, with consumer companies becoming the driver of the rally and offsetting the decline in cyclicals, whose earnings largely hinge on the strength of the economy. A gauge of Chinese-listed consumer staples stocks closed at a record high for a fifth day on Wednesday after bottoming out last month, while a measure of commodity producers – including Baoshan Iron & Steel and Jiangxi Copper – retreated 5 per cent from last month’s two-year high. Recent figures showed a mixed picture of the world’s second-largest economy. Key data such as factory output and fixed-asset investment all trailed estimates in August whereas an official purchasing managers’ index of the manufacturing industry hit a five-year high last month. Industrial Securities said the pickup in the PMI was because of seasonal factors and its sustainability needed to be further assessed.