It All Comes Down To China

Monday, 1 Jun 2009 | 6:23 PM ET

China's manufacturing sector continued to expand moderately in May as new export orders improved, two surveys showed on Monday, adding to tentative signs that the world's third-largest economy is stabilising.

The official purchasing managers' index (PMI) fell slightly to 53.1 from 53.5 in April, its third straight month above the mark of 50 that separates expansion from contraction.

A separate PMI published by Hong Kong-based brokerage CLSA rose to a 10-month high of 51.2 from 50.1 in April, its second month above 50.

"Conditions are gradually improving in response to stimulus spending... China remains on track for a moderate recovery after the sharp slowdown seen late last year," says Brian Jackson, an analyst with Royal Bank of Canada in Hong Kong.

Behind the Rally
The Fast Money traders discuss what's behind Monday's's market rally.

How can you trade the trend?

I’m keeping a close eye on China’s consumers, counsels Tim Seymour, they seem to be in much better shape than their American counterparts.

As a result, I think you can game that strength through a real estate play -- E-House which trades here in the US. I also like the gaming space with online game developer Giant Interactive .

Or you can play the tried and true China Mobile , China Unicom or even Nokia , Seymour adds.

If you're more comfortable with a company that’s headquartered here in the US, look at Yum Brands, adds Guy Adami. They generate a considerable amount of sales from China

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Trader disclosure: On June 1st, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (WFC), (AAPL), (F), (TGT); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman's Firm Owns (TBT), (RIG), (NOK); Finerman Owns (TBT); Finerman's Firm And Finerman Own (BAC) Preferred Shares And Are Short (BAC); Finerman's Firm Owns (MRO); Finerman's Firm And Finerman Own (WFC) Preferred Shares, Finerman's Firm Is Short (WFC); Finerman's Firm Is Short (IJR), (MDY), (SPY); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (USO); Najarian Owns (AMAT) Call Spread; Najarian Owns (BP) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (FCX) Call Spread; Najarian Owns (HIG) Put Spread; Najarian Owns (PFE); Najarian Owns (MOS; Najarian Owns (XHB) Call Spread; Najarian Owns (MRO) Calls; Najaria Owns (NBR) Calls

Seymour Owns (FXI)

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