China: Signs of stabilisation in HSBC manufacturing PMI – Danske

FXStreet (Barcelona) - Flemming J Nielsen of Danske Bank, shares that the signs of stabilisation is being seen in the Chinese HSBC manufacturing PMI, which points towards a modest recovery in growth in H1 15.

Key Quotes

“The signs of stabilisation evident in the manufacturing PMI in January are consistent with the hard data released for December. Credit growth and investment demand stabilised and growth in industrial production accelerated slightly in December. The relatively strong details in January’s HSBC/Markit manufacturing PMI suggest continued moderate improvement in the coming months and are consistent with our view of a modest recovery in H1 15.”

“Policy-wise recent data have taken away the pressure on Peoples Bank of China (PBoC) for imminent easing. We still expect PBoC to cut the reserve requirement twice by 50bp in 2015. That said, PBoC continues to act very cautiously in the interbank market, suggesting some unwillingness to cut the reserve requirement and boost liquidity in the interbank market substantially.”

“China in our view remains in a managed debt leveraging situation with government focus on containing credit growth and managing financial risk. Hence, we are unlikely to see a substantial recovery in growth in H1 15.”