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16 Dec 2014
China: HSBC flash PMI weaker than expected in December - Nomura
FXStreet (Barcelona) - The Research Analysts at Nomura observe that weaker domestic demand led the December HSBC flash PMI of China to fall by 0.5pp to 49.5, signalling that further December data might be disappointing.
Key Quotes
“The HSBC flash PMI for China surprised the market on the downside, falling by 0.5 percentage points (pp) to 49.5 in December (Consensus: 49.8; Nomura: 50.1) from 50.0 in November. This is the first sub-50 expansion/contraction threshold reading in seven months, compared to an historical 0.15pp rise from November to December over the period 2005-13 (excluding 2008).”
“The contraction in the HSBC PMI is mainly due to weaker domestic demand.”
“The HSBC flash PMI is the first December data release. The greater-than-expected decline in the flash PMI raises the possibility that December data will disappoint.”
“We expect more policy easing to help stabilize growth and to achieve the annual growth target of around 7.5% for 2014.”
“We maintain our forecast of 7.3% y-o-y real GDP growth in Q4, but see risks to the downside.”
“We continue to expect one 50bp cut to the banks’ reserve requirement ratio (RRR) in each quarter of 2015 and 25bp cuts to both the lending and deposit rates in Q2, although we acknowledge the risk of a RRR cut being frontloaded before year-end.”
Key Quotes
“The HSBC flash PMI for China surprised the market on the downside, falling by 0.5 percentage points (pp) to 49.5 in December (Consensus: 49.8; Nomura: 50.1) from 50.0 in November. This is the first sub-50 expansion/contraction threshold reading in seven months, compared to an historical 0.15pp rise from November to December over the period 2005-13 (excluding 2008).”
“The contraction in the HSBC PMI is mainly due to weaker domestic demand.”
“The HSBC flash PMI is the first December data release. The greater-than-expected decline in the flash PMI raises the possibility that December data will disappoint.”
“We expect more policy easing to help stabilize growth and to achieve the annual growth target of around 7.5% for 2014.”
“We maintain our forecast of 7.3% y-o-y real GDP growth in Q4, but see risks to the downside.”
“We continue to expect one 50bp cut to the banks’ reserve requirement ratio (RRR) in each quarter of 2015 and 25bp cuts to both the lending and deposit rates in Q2, although we acknowledge the risk of a RRR cut being frontloaded before year-end.”