China: Tracking signs of policy easing - Nomura

Analysts at Nomura note that on the heels of the recent reserve requirement ratio (RRR) cut from PBoC, which came into effect on 5 July, there have been further signs of policy easing in recent weeks.

Key Quotes

“It includes a possible postponement of the release of new rules on banks’ wealth management products (WMPs), adjustments to the anti-pollution campaign that was deemed too stringent in its past “one-size-fits-all” approach, and some softening in the government’s deleveraging drive.”

“Faced with a domestic slowdown proving to be worse than expected and potential fallout from a trade war, we expect the government’s deleveraging efforts to be further softened and more proactive policy easing measures to be rolled out in H2.”

“We maintain our call for a growth slowdown in H2 and another 100bp RRR cut this year. Despite a raft of incoming policy easing measures, we expect GDP growth to slow noticeably in H2 and we believe markets should steel themselves for strong headwinds and increased volatility.”