The disappointing manufacturing and non-manufacturing PMIs in April was not what the Chinese stock market was telling us in mid-April!

The Shanghai Composite Index tends to lead the China CFLP Manufacturing PMI by one month. In mid-April the market was actually anticipating stronger PMIs through end May! Sure, a weaker than expected PMI in April and perhaps May and therefore a slowdown of the terrific pace of economic growth is likely to put any further monetary policy tightening by the PBoC on hold and may entice buyers, especially on the outlook of reconstruction in Japan. But what about the impact on Chinese company profits? Over the past week realisation of the possible repercussions of Japan's twin disaster hit the market as it fell by nearly 4% since April's high.

Chinese stocks fell this morning for the fourth consecutive day on worries about the outlook for corporate earnings growth, reported Bloomberg. The Shanghai B Index in US dollar (in which most foreigners invest in China) plunged 5.4% in today's trading session. The Shanghai Composite Index was down 0.7% at the time of writing. The Chinese equity slide could cast a cloud over emerging markets as a whole, at least in the short term. I will not join the bulls like PIMCO and others at this stage and will definitely not add to my Chinese and other equity positions ... yet.

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