"Next week in China" fra Lundgreen's Capital

Major Data Releases:

• 29 June: China to hold the 2026 Beijing Space Computing Power Conference
• 30 June: National Bureau of Statistics of China to report June Purchasing Managers’ Index (PMI)
• 1 July: RatingDog to report June industrial PMI for China
• 2 July: Hong Kong to report May retail sales statistics
• 3 July: RatingDog to report June services PMI for China

The PMI data will be the main item on the economic calendar for China markets next week, with few data releases scheduled. Meanwhile, Wednesday, 1 July, will be a trading and public holiday in Hong Kong to remember its establishment as a special administrative region.

Attention will also be on the 2026 Beijing Space Computing Power Conference, which may provide further colour on the development of China’s space computing sector. This technology aims to shift part of the data processing workload from ground-based data centres to in-orbit systems, helping reduce bandwidth constraints and latency as satellite data volumes increase. While the sector remains in early stages of commercialisation, the conference could offer useful signals on progress in areas such as space-grade hardware, thermal management, and orbital infrastructure standards.

We expect China’s manufacturing PMI to edge down slightly in June. According to the Emerging Industries PMI, a leading indicator, the June reading fell by 2.5 points month-on-month to 50.4 to remain above the expansion-contraction threshold, with the pullback still within seasonal range.

Production-demand, price, and profit indicators all declined by varying degrees. The demand-side pullback was slightly larger than that of production, possibly reflecting the slowdown in overseas frontloading demand as geopolitical tensions eased. Therefore, the supply-demand balance weakened marginally, with the production-to-demand ratio rising to 3 from an average of 1.5 over the last six months. Price indicators also softened for a second consecutive month, with purchase and selling price gauges falling by 4.4 and 4.3 points month-on-month, respectively, ending the one-way uptrend since December 2025. The profit indicator declined by 0.2 points from a month ago while the loan difficulty indicator rose by 2.9 points, possibly reflecting tighter liquidity conditions around quarter-end. By sector, new-generation information technology, high-end equipment manufacturing and new energy remained above their seasonal averages, while biotechnology and new energy vehicles were below trend. Overall, we expect the June manufacturing PMI to show limited trend direction and to be dominated by modest fluctuations.

Chinese equities mostly recovered over the past week. As of Thursday, 25 June, the Shanghai Composite rose 0.73 per cent, while the Shenzhen Component and ChiNext indices gained 1.95 per cent and 2.81 per cent, respectively. The MSCI China Index was down 3.74 per cent, an outlier as it includes Hong Kong-traded shares. Mid-cap stocks outperformed small and large caps, while growth shares largely outpaced value. Looking ahead, short-term volatility may persist after the earlier rally in the technology sector, reflecting crowded positioning and some signs of overheated market microstructure rather than a deterioration in industry fundamentals. From a macro perspective, China’s growth momentum continues to be supported by resilient exports and ongoing policy support, while the recovery in domestic demand remains relatively moderate.

This piece has been co-produced with Yiyi Capital Limited in Hong Kong, a China specialist and a part of a global financial services group.

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