China risks losing growth momentum – Nomura

FXStreet (Barcelona) - Asian Economists at Nomura, believe that the soft HSBC flash PMI and the recent MNI business sentiment index paint a soft picture for Chinese growth and suggest further easing on the cards, and forecast a 100bp RRR and 25bp benchmark rate cut for 2015.

Key Quotes

“The falling HSBC flash PMI, together with the MNI business sentiment index released earlier, suggests growth momentum may have remained weak in April. We expect the official PMI (due on 1 May) to drop to 49.8 in April from 50.1 in March.”

“For Q2, while we still expect a sequential improvement in growth momentum, we believe real GDP growth will slow further to 6.6% y-o-y from 7.0% in Q1 due to last year’s high base.”

“We continue to call for two more 50bp reserve requirement ratio cuts and three more 25bp benchmark rate cuts over the rest of the year.”