Analysts at Nomura expect more easing/stimulus measures ahead for Chinese economy, albeit less than in previous cycles.
Key Quotes
“We see a rising likelihood of cuts to the value-added tax, corporate income taxes and social security taxes to boost corporate investment and production.”
“More bond issuance (by the central government, local governments and policy banks) and faster fiscal spending, especially on infrastructure investments.”
“Increasing commercial bank loan quotas and encouraging banks to increase lending to the private sector.”
“Taking a softer stance on state-owned enterprises by emphasising the “competitive neutrality”.”
“More direct liquidity injections via RRR cuts, the MLF and open market operations to contain interbank rates and bond yields. We see another 50-100bp RRR cut before March 2019.”
“Beijing could allow RMB to depreciate further to offset the expected export slump.”
“Our FX strategy team, led by Craig Chan, expects USD/CNH to break above 7.0 by year-end.”
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