No change to the stimulus outlook in China. Goldman:
Easing measures are gradually coming through. Given persistent growth headwinds and dampened sentiment on negative headlines of private developers / trust companies, the PBOC surprised the market with a policy rate cut in mid-August. Policymakers also released a slew of easing measures over the last two weeks of August, including relaxing the classification of first-time homebuyers, reducing the minimum down payment ratios for first and second home buyers, lowering interest rates of existing mortgages, and raising tax deductions for individual taxpayers. These piecemeal easing measures signal an increased focus on stabilizing the property market, and could collectively boost economic growth by around half a percentage point by our estimates. We expect more easing measures underway, including more policy push for urban village renovation and public housing construction, more infrastructure investment supported by policy bank credit and additional LGSB issuance from previous years’ unused quota, another 10bp policy rate cut in Q4, and two more RRR cuts (in September and Q4, respectively). For policy signals, the bi-weekly State Council meetings, the bi-monthly National People’s Congress (NPC) Standing Committee meetings (for extra-budget fiscal arrangements), as well as a possible Third Plenum this autumn are important to watch. Short-term moves in China FX/Rates are particularly difficult to call, as they depend on the mix of monetary policy easing(which leads to lower rates and weaker RMB) and non-monetary policy easing(which leads to better growth outlook, higher rates, and stronger RMB).
Nothing there changes the trend to onward and downwards for growth, interest rates and CNY.
