For the sixth consecutive month, activity in Chinese factories falls

  • Activity in Chinese factories, as measured by the official manufacturing purchasing managers index, declined once again in January. 

  • The manufacturing PMI has been below 50, which indicates contraction, since July. 

  • The January figure came in at 49.4, down from 49.7 in December. *

  • The non-manufacturing PMI, which measures activity in the services sector, fell 0.9 points from December to 53.4. 

  • Market reaction: The Shanghai Composite fell 1.78%. 

Outgoing Taiwanese president to visit contested island

  • The outgoing president of Taiwan, Ma Ying-jeou, plans to visit the Itu Aba island on Thursday. +
  • Itu Aba, also known as Taiping, is part of the Spratly Islands and is one of a number of contested islands in the South China Sea. 

  • The trip is dependent on weather conditions being good in the area.

  • China has been developing a number of airstrips on artificial islands in the South China Sea, significantly escalating tensions in the region. 

  • Last week, a report commissioned by the U.S department of defence warned that if the current state of affairs continues, the South China Sea would effectively be a 'Chinese lake' by 2030.

  • President Ma met with his Chinese counterpart, President Xi, in November last year - the first meeting between the leaders of China and Taiwan. 

  • Tsai Ing-wen, Taiwan's president elect from the less 'China friendly' Democratic Progressive Party, does not take office until May and is not sending a representative on the trip. 

Industrial profits in China keep falling

Industrial profits by selected sector in 2015

  • Profits at large industrial firms in China fell 4.7% year on year in December according to data released on Wednesday, accelerating on November's decline of 1.4%. 

  • For all of 2015, industrial profits were 6,355.4 billion yuan - a 2.3% decrease on 2014. 

  • A breakdown of the data by industry, provided by the National Bureau of Statistics, reveals that the profits of firms in the mining and quarry sector dived 58.2% in 2015. 

  • The manufacturing sectors saw industrial profits rise 2.8% over the course of the year. 

Chinese markets close down sharply

  • Stock exchanges on mainland China closed down on Tuesday as the volatility that has characterised the market this month reemerged. 

  • The Shanghai Composite Index closed down 6.42%. 

  • The CSI 300, which follows 300 stocks on the Shanghai and Shenzhen indexes, closed down 6.02%. 

  • Meanwhile, oil prices fell below $30 a barrel as the rally of recent days fizzled out. 

Year to date performance

Bloomberg data; as of January 26th