China's stock markets may see-saw through the start of the year, in part on a disappointing Caixin manufacturing Purchasing Managers' Index (PMI), but the chief executive of DBS thinks the figures are "inconsequential."
He warned, however, that heavily indebted Chinese corporates should be a key concern amid weakening in the yuan.
"The PMI data is completely the wrong metric to look at," DBS CEO Piyush Gupta told his bank's private banking clients on Wednesday. "Frankly, I think it's an inconsequential piece of information."
The mainland stock markets didn't appear to agree. Chinese equities plunged in Monday's trading session after feeble manufacturing surveys revived concerns over the country's economic slowdown. The CSI300 index dipped 7 percent in afternoon trade on Monday, resulting in trade being suspended for the day. In early trade Thursday, another full-day suspension was triggered when the CSI 300 fell more than 7 percent.
The Caixin PMI, released Monday, was weaker than expected at 48.2 in December, from 48.6 in November, contracting for a tenth month and coming in below a Reuters poll forecast for 49.0. Levels below 50 indicate contraction. The Caixin PMI is a closely-watched gauge of nationwide manufacturing activity, which focuses on smaller and medium-sized companies, filling a niche that isn't covered by the official data.