Asia factories slack as trade war agonizes

Soft factory activity was seen from China, South Korea, Taiwan, Indonesia, and Malaysia, indicating a broad slowdown in factory activity throughout Asia.


Factories in Asia collectively felt their factory lines stagnate in October, the same month which saw some United States (US) tariffs on China take effect.

Soft factory purchasing managers’ index (PMI) numbers were seen from China, South Korea, Taiwan, Indonesia and Malaysia, indicating a broad slowdown in factory activity throughout the world’s largest and most populous continent.

South Korea’s Nikkei PMI fell from 51.3 points in September to 51 points last month while Indonesia’s PMI edged lower to 50.5 points.

Taiwan and Malaysia factories felt a larger slump in activity, with their PMIs reversing from expansion to enter into negative territory. Taiwan’s Nikkei PMI fell from 50.8 points in September to 48.7 points, while Malaysia’s Nikkei PMI reversed from an expansion of 51.5 points in September to contract at 49.2 points.

A lone bright spot could be seen from Japan’s Markit/Nikkei PMI which adjusted to 52.9 points for last month, higher than September’s 52.5 points, helped by a rebound in export sales.

China, the country that is directly involved in the trade spat with the US, saw its Caixin/Markit PMI stall at 50.1 points for last month, a slight increase from 50 points in September. Economists in a Reuters poll had expected the sector to fall to a contractionary reading of 49.9 points.

Official PMI numbers from China, which measures the performance of large enterprises pointed its manufacturing sector at a score of 50.2 points, a slowdown from 50.8 points in September.

The US and China have slapped tariffs on each other in an ongoing trade fight, with the US imposing about US$250 billion of duties on Chinese goods and China retaliating with US$110 billion on US items.

The International Monetary Fund have said that the trade war escalation would hit China harder than the US and have downgraded the country’s growth outlook for next year.

The US is said to be preparing to announce tariffs on all remaining Chinese imports by early December if upcoming talks between both presidents this month fail to ease the trade war tension.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IG Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer

Find out more about