What is the manufacturing PMI and why does it matter?

The Manufacturing Purchasing Managers' Index (PMI) is a monthly economic indicator that measures the health of the manufacturing sector. A reading above 50 indicates expansion, while below 50 signals contraction. Investors watch this closely because manufacturing activity often predicts broader economic trends. When China's PMI rises, it suggests factories are receiving more orders and increasing production, which typically benefits companies throughout the industrial supply chain.

How does China's manufacturing sector affect global companies?

As the world's largest manufacturing hub, China's industrial activity has widespread effects. When Chinese factories increase production, they need more raw materials (benefiting mining companies), more machinery and equipment (helping industrial manufacturers), and more logistics services (boosting transportation firms). Even companies outside China can see significant revenue growth when Chinese manufacturing rebounds, especially if they supply essential materials or technologies to Chinese factories.

What are cyclical stocks and why are they included in this group?

Cyclical stocks are shares in companies whose performance tends to follow economic cycles of expansion and contraction. Many companies in this group—like miners, steel producers, and machinery manufacturers—are cyclical because their revenues are closely tied to economic activity. These stocks often decline during economic slowdowns but can experience strong growth during recoveries. They're included because China's manufacturing rebound represents a potential turning point in the economic cycle that could drive significant gains for these businesses.

What's the difference between upstream and downstream companies in this collection?

Upstream companies in this collection (like BHP, Vale, and Rio Tinto) are primarily involved in extracting and processing raw materials like iron ore and copper that are essential inputs for manufacturing. Downstream companies (like Caterpillar, Rockwell Automation, and China Yuchai) produce machinery, components, and systems used in manufacturing processes or the movement of finished goods. Both types benefit from manufacturing growth, but upstream companies typically respond first to increased demand, while downstream companies may see more sustained benefits as the recovery matures.

15 handpicked stocks

China's Manufacturing Rebound

Early signs of recovery in China's manufacturing sector are creating investment opportunities. This collection features carefully selected companies positioned to benefit as the world's largest manufacturing economy starts to stabilize and grow again.

Han Tan | Market Analyst

Published on June 30

Top Picks from This Group

Here are a few of the assets in this group. Create an account to unlock the full list.

BHP Billiton Limited

BHP

Current price

$55.50

As a leading global producer of iron ore and copper, BHP's revenue is closely tied to the health of China's manufacturing and construction sectors.

Rio Tinto plc

RIO

Current price

$66.26

This major mining company is a primary supplier of iron ore to China, making it a direct beneficiary of increased steel production and industrial acti...

This major mining company is a primary supplier of iron ore to China, making it a direct beneficiary of increased steel production and industrial activity.

Vale S.A.

VALE

Current price

$11.02

A top global producer of iron ore and nickel, Vale's performance is heavily influenced by demand from China's vast industrial base.

Freeport-McMoRan Inc.

FCX

Current price

$38.87

Caterpillar Inc.

CAT

Current price

$490.57

China Yuchai International Limited

CYD

Current price

$38.86

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12 Month Growth Potential

Use the growth calculator to see how much investing in these assets could return over one year, based on aggregated analyst sentiment provided by Refinitive Ltd.

If you invested across these assets:

≈

In 12 months it might be worth:

$1,000.00

+3.18%

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About This Group of Stocks

Our Expert Thinking

China's manufacturing PMI has risen for two consecutive months, signaling a potential turnaround. Companies in this group operate across the industrial value chain and stand to directly benefit from increased factory output and demand in the world's largest manufacturing economy.

What You Need to Know

This collection represents a tactical opportunity tied to economic recovery. It includes diverse companies from miners supplying raw materials to manufacturers of machinery and automation systems. Any improvement in Chinese industrial activity creates ripple effects benefiting these firms.

Why These Stocks

These companies were specifically selected for their direct exposure to China's manufacturing sector. Each business plays a critical role in the industrial supply chain, from providing essential raw materials to delivering the equipment and technology needed for production growth.

Group Performance Snapshot

3.18%

Average 12 Month Profit

On average, analysts expect assets in this group to grow 3.18% over the next year.

11 of 15

Stocks Rated Buy by Analysts

11 of 15 assets in this group are rated Buy by professional analysts.

Source: Analyst sentiment is provided by Refinitiv Ltd, a global leader in financial market data with over 40k business clients. Refinitiv Ltd is an independent third party to Nemo. This is not advice.

Why You'll Want to Watch These Stocks

🔄

Early Signs of Recovery

China's manufacturing PMI has risen for two consecutive months, signaling a potential turnaround that early investors could capitalize on before the broader market catches up.

🌐

Global Ripple Effects

When China's factories accelerate production, it triggers demand across the entire industrial supply chain, creating a wave of opportunity from raw materials to finished goods.

📊

Cyclical Opportunity Moment

Industrial recoveries like this often follow predictable patterns, potentially rewarding investors who recognize the early indicators and position themselves accordingly.

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