China: Official and Caixin version of the PMI may be a touch lower - BBH

Research Team at BBH expects that China's official and Caixin version of the PMI may be a touch lower than at the end of last year.  

Key Quotes

“The February time series is likely to be skewed by the Lunar New Year celebration and will most likely not elicit an important market response.  Capital outflows appear to have slowed, and the February reserve figures are expected to be reported March 6-7.  Recall that the $12.3 bln draw down of reserves in January was the smallest since last July.  The yuan has edged higher against the US dollar this month, but the 0.2% gain is more a sign of stability than an appreciating trend.”  

“The implied volatility of the yuan has fallen sharply.  This is consistent with less bearish outlooks.  The implied 12-month volatility is near 6%, the lowest since late 2015. It had finished last year above 8%.  The implied 3-month vol is near 4.7%, which is a four-month low.  It was near 7.3% at the end of last year.  Also since early January, the offshore yuan (CNH) has traded at a premium to the onshore yuan (CNY).”