Yum, Nike, Coach Rally as Chinese PMI Shows Expansion
Shares of Yum! Brands (NYSE: YUM), Nike (NYSE: NKE) and Coach (NYSE: COH) saw strong rallies on Thursday. Coach was up well over two percent, while Yum was up nearly four percent and Nike was up nearly five percent.
Official Chinese PMI came in below expectations overnight Wednesday, but still above the key 50 number that indicates expansion. HSBC's Chinese flash PMI was under 50, but climbed from previous readings, perhaps indicating that the pace of Chinese deceleration was declining.
All three stocks are known to have large exposure to China, and will thus move in sync with major Chinese economic news.
Yum Brands is the parent company of KFC fast food restaurants, which is hugely popular with China's growing middle class. If China's economy is growing and putting more cash into the hands of its consumers, demand for KFC would likely rise and result in increased profits for Yum.
Nike and Coach have similar exposure, though are admittedly thought to carry a more luxurious appeal than KFC. Shares of Nike also may have benefited from rival Adidas' decision to close its only plant in China.
Should those investors who anticipate a further rebound in China look to play these names over Chinese companies? Perhaps not. iShares FTSE China 25 Index (NYSE: FXI) saw its own impressive rally, gaining over three percent on the session. But not all Chinese companies benefited on Thursday, Baidu (NASDAQ: BIDU) for example, actually traded into the red.
At any rate, investors with stakes in Nike, Coach or Yum ought to be aware of their level of exposure to the Chinese market. Even if Americans are buying lots of Taco Bell's Doritos Locos Tacos, for example, investors in Yum might still take a loss if future Chinese data disappoints.
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