Our Take On The Latest Stimulus


BMI View: The prevailing negativity surrounding China's near-term macro prospects has been softened somewhat by news of yet another 'mini-stimulus' unveiled by Beijing. As has been the case in the past, our view is that further fiscal and monetary pump priming will fail to arrest the structural deceleration in the Chinese economy and will, at best, merely serve to cushion the slowdown. That said, a n unwinding of downbeat sentiment bodes well for a continuation of relief rallies in Chinese equities and risk assets at large. We remain tactically bullish towards the Shanghai Composite and Chile's benchmark IPSA index.

In recent weeks, the prevailing negativity surrounding China's near-term macro prospects has been softened somewhat by news of yet another 'mini-stimulus' unveiled by Beijing. While facts and figures are thin on the ground, the total slew of measures is expected to total around CNY500bn (US$81.7bn) and will be centred around a ramp-up in railway investment, temporary tax cuts for small and medium sized enterprises (SMEs), and an extension of credit to local governments.

In this article, we look at the likely growth impact of such measures and, at the risk of repeating ourselves, argue why yet another round of stimulus will fail to arrest the structural deceleration in the Chinese economy.

Less Bang For Buck
China - Manufacturing Purchasing Managers Index

or Register now for free to read the full article

This article is tagged to:
Sector: Country Risk
Geography: China

Related products in our Store...

Check out our most popular reports below or view more in our store