China A50

China A50: Macquarie thinks any form of policy tightening by the Chinese government is unlikely in the short-term, in fact mini-stimulus measures are more likely. As such, the recent profit-taking in Chinese markets are more likely a blip than tightening signal. Last Friday, China’s August money supply figures showed a slower increase (Aug: +12.85% y/y, Jul: +13.5%) in M2 and less aggregate financing (Aug: Rmb1.135tr, Jul: Rmb1.584tr). This adds to evidence of slowdown from earlier trade figures, which showed an unexpected 2.4% y/y drop in imports as well as a slowdown in manufacturing expansion according to HSBC PMI. However, outright stimulus in the form of broad rate and RRR cuts are highly unlikely. Premier Li Keqiang said China already has “a lot of money in the pool, and we can’t rely on monetary stimulus to spur economic growth”, at the same time he remains firm that the nation is capable of meeting its 7.5% annual growth target.