Marketwatch reports:
HONG KONG (MarketWatch) — The bad news coming out of China’s economy in recent days has been more a series of thuds than a trickle.
HSBC’s widely watched preliminary manufacturing Purchasing Managers Index fell under 50 last month to reach a 32-month low, while foreign reserves are now falling, as well as property prices.
But the silver lining in this downbeat news could be an early Christmas gift for equity investors in the form of a decisive loosening of monetary policy. China could be ready to unleash its own big bazooka, giving equity markets a lift.
Following the move last week to ease the reserve ratio requirements (RRR) for twenty rural co-operative banks 50 basis points to 16%, expectations are growing this is the forerunner of a more general easing.
IHS Global Insight released a note last week titled “And now the deluge? – China starts loosening policy in earnest.” They say last week’s initial cuts demonstrate a clear shift in policy bias and to expect a headline RRR cut around the end of the year.
Read more: http://www.marketwatch.com/story/china-may-be-at-policy-turning-point-2011-11-27?siteid=rss&rss=1
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