China Stocks, Yuan Tumble As PMI Plunges To 28-Month Lows

Despite additional easing and a 403.5 billion yuan 1-year maturity MLF operation, yuan is tumbling along with China (and Hong Kong stocks) following an ugly Caixin Composite PMI print (the weakest since June 2016).

New orders tumbled to 50.3, the weakest since Feb 2016...

The CSI 300 Consumer Staples Index is the worst performer among 10 industry groups on the broad market with a 2.7% loss.

As Bloomberg's Kwoungwha Kim notes, it is quite a bad day for consumer stocks to underperform. But they are down as October's Caixin PMI tumbled. To keep the economy growing, China needs to nurture its consumer market and that requires more imports!

Offshore yuan is extending Friday's losses from the exuberant Trump trade headline squeeze...

China stocks are giving back Friday's bounce...

And Hang Seng is plunging...

The PBOC skipped open market operations once again but conducted 403.5b yuan of MLF operations (matching the total maturity of MLF at CNY403.5 billion).

President Xi just started speaking and took multiple jabs at President Trump:

Xi reiterated support for multilateral trade, globalization, and some stock standard language on China's role preserving the global trading order.

Xi says globalization is an irreversible "historic trend", and every nation should make their effort in it.

"The will of history will keep rolling forward no matter what." [ZH: Like a tank in Tiananmen Square?]

"Openness has become a trademark of China." [ZH: apart from the internet, and trade,...]

"China's door will never be closed, it will only open still wider." [ZH: except to Winnie the Pooh]

"It is our sincere commitment to open the Chinese market." [ZH: if you give us all your IP first]

It does feel like his opening remarks are less of an olive branch to the US trade hawks and more of an admonishment of their outlook. Of course, China critics would counter that Xi has said all of this before.

Finally - as PMI plummets, Xi confirms the delusion: "We can take an absolutely positive view on China economy".