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21 May 2015
Further easing expected in China – Danske Bank
FXStreet (Edinburgh) - Senior Analyst Christin Tuxen at Danske Bank sees the PBoC easing further in the medium term.
Key Quotes
“Overnight the release of preliminary Chinese and Japanese PMIs provided a small boost to risk appetite as both rose in May”.
“Although China’s PMI (HSBC) remained below the 50 boom/bust level, the details were strong with notably new orders-to inventory up”.
“Overall, this suggests that the HSBC manufacturing PMI is now bottoming out”.
“That said, there is still a considerable gap between the manufacturing PMIs and the hard industrial production data as the latter is substantially weaker than the surveys”.
“We maintain that the Chinese economy will recover moderately in H2 supported by current monetary easing”.
“Still, GDP growth will likely drop below 7% y/y in Q2 and we expect to see further monetary easing in the coming months as a result”.
Key Quotes
“Overnight the release of preliminary Chinese and Japanese PMIs provided a small boost to risk appetite as both rose in May”.
“Although China’s PMI (HSBC) remained below the 50 boom/bust level, the details were strong with notably new orders-to inventory up”.
“Overall, this suggests that the HSBC manufacturing PMI is now bottoming out”.
“That said, there is still a considerable gap between the manufacturing PMIs and the hard industrial production data as the latter is substantially weaker than the surveys”.
“We maintain that the Chinese economy will recover moderately in H2 supported by current monetary easing”.
“Still, GDP growth will likely drop below 7% y/y in Q2 and we expect to see further monetary easing in the coming months as a result”.