Russia's manufacturing sector contracted slightly in September, as weak demand led to a continued decline in production and new orders, a business survey published on Thursday showed.
A survey conducted by Standard & Poor's Global showed that the purchasing managers' index for the Russian manufacturing sector, seasonally adjusted, rose to 49.8 points in September from 48.8 points in August, noting that the level of 50 points separates growth from contraction, according to Reuters.
Production decreased for the second month in a row, although the pace of decline was slower compared to August, and companies attributed the decrease in production to weak demand and the slow flow of new orders.
New orders also declined for the second month in a row, with companies citing rising prices and intensifying competition as reasons for the decline. Export orders fell for the eleventh month in a row, and at the fastest pace since May 2022.
Employment fell for the tenth month in a row, marking the fastest pace of job cuts since May. Companies attributed the decline in employee numbers mostly to the failure to appoint replacements for workers who left their jobs voluntarily.
Cost pressures remained noticeable, but fell to their lowest level in three months, while product price inflation slowed to its weakest level since June. Supplier delivery times also rose by the most since October 2024, amid transportation delays and logistical problems.
Manufacturers expressed greater optimism about next year's expectations, as the level of optimism rose to its highest level in three months, driven by hopes of increasing demand and attracting new customers, despite the level of confidence remaining below the historical series average.
India's manufacturing sector expanded at a sharp pace in September, ending a three-month slowdown, with strong demand pushing factory activity growth to the fastest pace in seven months, resuming hiring and boosting business confidence, according to a special survey released on Thursday.
The HSBC India Manufacturing Purchasing Managers' Index, compiled by Standard & Poor's Global, rose to 55.1 points in September from a 5-year low of 52.8 points in August, but came below the initial estimate of 55.7 points.
The reading was the highest since February. An index reading exceeding 50 points indicates growth in activity.
New orders rose at the fastest pace since February, driven by increased demand for electronic, food, pharmaceutical and textile products, according to the survey. Export orders also accelerated, with manufacturers citing increased demand from customers in Brazil, Europe, the United Arab Emirates and the United States.
Production rose sharply, with the pace of expansion accelerating to the strongest level since May, supported by new commercial orders and rising demand.
“Companies purchased more materials and increased their inventories in preparation for expected sales,” said Pranjul Bhandari, chief economist at HSBC in India. Finished goods inventories recorded their second largest increase in nearly 12 years, indicating a clear shift from low inventory levels.
High demand also led to a resumption of hiring. The number of workers grew at the strongest pace since May, recovering from an actual decline in August, the first decline in industrial jobs in two and a half years.
Business confidence rose to a four-month high in September, driven by optimism stemming from a surge in new inquiries and expectations of continued demand.
Cost pressures rose, with input cost inflation accelerating compared to August, driven by higher prices for electronic components, pharmaceutical products and steel. However, the inflation rate remained below its long-term average. Selling prices also increased compared to August, although the increase was modest and at a pace that also remained below the general trend.
Inflation remained above the Reserve Bank of India's 4 percent medium-term target for the third straight month in August, driven by a sharp rise in energy and food costs. To combat rising inflation, the Reserve Bank of India is expected to raise interest rates by a total of 50 basis points this year to 5.75 per cent.
The Saudi stock market ended the first nine months of 2026 with a limited decline of about 0.5 percent, compared to a loss of 4.4 percent during the same period last year, after the pressures that the market was exposed to during the third quarter, specifically in September, dissipated the gains that the main market index “TASI” had accumulated since the beginning of the year.
TASI closed the Wednesday session, the last trading session in September and the third quarter, at 10,440.64 points, compared to 10,490.69 points at the end of 2025, with a loss of about 50 points, equivalent to 0.48 percent since the beginning of the year.
The performance shows a relative improvement compared to the similar period in 2025, when the index declined 4.43 percent during the first nine months, from 12,036.50 points at the end of 2024 to 11,502.97 points at the end of September last year.
Despite the difference in the performance rate between the two periods, the current level of the index remains about 9.2 percent lower than the close at the end of September 2025, in light of the difference in the comparison base, after the market entered the year 2026 from lower levels following the declines recorded during the last months of last year.
Variation between quadrants
The market's performance during the current year was characterized by clear variation between the quarters. TASI ended the first quarter at 11,249.54 points, rising by about 7.2 percent since the beginning of the year, before declining about 4 percent during the second quarter and closing June at 10,799.92 points.
The pressures continued during the third quarter, with the index losing about an additional 3.3 percent until the end of September, compared to an increase of about 3 percent during the same period in 2025.
September represented the most prominent turning point in the market’s performance during the year. The index began the month at 11,127.08 points, rising by more than 6 percent since the beginning of 2026, before losing about 686 points within one month, equivalent to 6.17 percent, erasing all of its accumulated gains and returning to negative territory.
This comes compared to an increase of about 7.5 percent recorded by the index during September of last year, which reflects a clear discrepancy in market performance between the two periods.
Liquidity decline
In terms of liquidity, trading data during earlier periods of the year showed a decline compared to 2025, as the value of shares traded in the first quarter amounted to about 291 billion riyals, a decrease of approximately 20 percent on an annual basis, while the value of trading at the end of September session amounted to about 4.25 billion riyals.
Dr. Sulaiman Al Hamid Al-Khalidi, a financial and economic expert and member of the Saudi Economic Society, told Asharq Al-Awsat that the TASI remaining close to the levels of the beginning of 2026, despite the wave of pressure it was exposed to during the third quarter, reflects the market’s ability to absorb a large amount of internal and external variables, and shows a clear difference compared to the same period in 2025, when the index’s losses exceeded 4 percent.
Cohesion of leading sectors
He explained that one of the most prominent factors that supported this cohesion was entering the market this year from a lower price base and more attractive valuations after the losses recorded during 2025, which relatively reduced the severity of the selling pressures, adding that the cohesion of a number of leading sectors, most notably banks and energy, in addition to the continued strength of non-oil economic activity and good cash distributions for a number of companies, contributed to providing support to the market.
He pointed out that continuing regulatory reforms, enhancing levels of disclosure and governance, developing the investment environment, and increasing market openness to international investors represent factors that support confidence in the medium and long term.
Regarding the market’s decline during the third quarter, Al-Khalidi said that the loss of most of the gains of the first half came as a result of a combination of pressures, including escalating caution related to regional geopolitical developments and the volatility of oil prices, in addition to profit-taking operations after the strong gains achieved by the index in the first quarter, pointing out that weak liquidity constituted one of the elements of pressure, and that any sustainable rebound requires a clear return of trading values and increased investor participation.
He added that the decline in some stocks and sectors with a large weight also put pressure on the movement of the index, in conjunction with a state of anticipation for the results of companies for the third quarter, the path of interest rates, and global economic developments.
“More like a repricing”
Al-Khalidi believes that what the market witnessed during the third quarter “is closer to repricing and an increase in the degree of selectivity, and not a fundamental change in the fundamentals of the Saudi economy,” indicating that the next stage will depend largely on the results of companies, the trend of liquidity, oil prices, and the ability of the leading sectors to regain momentum.
Cautious and selective
For his part, CEO of G-World, Mohamed Hamdi Omar, told Asharq Al-Awsat that the decline in liquidity levels should not necessarily be interpreted as an exit by investors or a loss of confidence, as much as it reflects an increase in the degree of caution and the move of investors to a more selective stage in decision-making, explaining that high levels of uncertainty make the investor less willing to build large or long-term positions, and pushes him to retain a larger portion of liquidity while waiting for more clear incentives.
He added that what the market is currently witnessing “is closer to a state of anticipation and re-pricing of risks than to a complete structural change in the nature of trading,” but the continued decline in liquidity for an extended period may gradually lead to a greater concentration of trading in companies with strong results, clear cash flows, and more attractive valuations.
Geopolitical developments
Omar pointed out that geopolitical developments, oil prices, and interest will remain among the most prominent factors influencing the market during the last quarter, pointing out the interconnectedness of these factors and their impact on risk appetite, inflation, and interest rate expectations. He added that the continuation of the high interest environment means that competition remains strong between stocks and fixed-return instruments, in addition to raising the cost of financing and putting pressure to varying degrees on the valuations of companies and sectors most dependent on borrowing.
Regarding oil, he indicated that it will continue to influence investors’ attitudes due to its connection to the economic and financial expectations in the Kingdom, but the rise in its prices cannot always be viewed as a single positive indicator. Especially when part of the rise is linked to supply disruptions and geopolitical risks.
Expected company results
Omar believes that companies’ results will be among the factors most capable of creating differentiation within the market during the next stage, explaining that in an environment in which liquidity declines and risks rise, “the market will transform from a collective movement to a selective market.”
He added that investors will give greater weight to companies' ability to achieve real growth in profits and cash flows and maintain profitability margins, while companies that are more sensitive to interest or that trade at high valuations without parallel growth may be more vulnerable to price fluctuations.
The Saudi market is entering the last quarter of 2026 from levels close to the point at the beginning of the year, after gains exceeding 7 percent at the end of the first quarter turned into a limited loss at the end of September, amid anticipation of the results of companies’ performance during the third quarter, the direction of liquidity, oil price movements, the interest rate, and geopolitical developments.
