Closing Bell 31th August: Harvey Norman Bucks the Trend with a Share Boost Amidst Profit Slump

China’s PMI

China’s manufacturing activity showed a slight improvement in August, with the purchasing managers’ index (PMI) rising to 49.7, though it still indicates contraction. The non-manufacturing PMI, encompassing the construction and services sectors, dropped to 51. Despite a strong start to the year, China’s economic recovery has been faltering due to challenges like a prolonged property slump and deflationary pressures on industrial profits. The services sector remains a relative bright spot, but even there, retail sales growth has decelerated. In response to these challenges, the People’s Bank of China has cut interest rates twice this year, and there are expectations of further fiscal measures to support growth.

Country Garden’s Financial Woes

Country Garden, once China’s top property developer by sales, reported a staggering first-half loss of nearly $US7 billion ($11 billion). The company has sounded alarms about its ability to meet debt obligations, even hinting at a potential default if its financial health continues to deteriorate. This grim announcement underscores the severity of China’s deepening real estate crisis. Country Garden’s debt challenges could even overshadow those of its rival, China Evergrande, given the sheer volume of its property projects.