Thursday, November 19, 2015

China: MNI business sentiment index falls below 50 in November - Nomura

FXStreet (Delhi) – Research Team at Nomura, notes that the Chinese MNI business sentiment index fell by 5.7 percentage points (pp) to 49.9 in November from 55.6 in October, much weaker than the average drop of 0.3pp from October to November over 2010-14.

Key Quotes

“The large decline in the MNI index, together with other weak high-frequency data (Figure 1), suggests that growth momentum remains soft. We expect the official PMI (due 1 December) to dip to 49.6 in November from 49.8 in October.”

“We maintain our forecast for real GDP growth to slow to 6.4% y-o-y in Q4 from 6.9% in Q3 as non-financial sector growth remains weak and the outsized financial services’ contribution to growth fades.”

“We continue to expect a moderate fiscal stimulus from the central government, with policy banks playing a critical role in financing. The People’s Bank of China will likely maintain an accommodative monetary policy stance, though the pace of easing may slow after the cuts to both the RRR and benchmark interest rates on 24 October.”
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