FXStreet (Delhi) – Research team at Nomura notes that investors have a very pessimistic view for the Chinese economy with some believing that its growth rate can even dip to as low as 5%.
Key Quotes
“Investors have a clear pessimistic bent on the economy. From 7%, 6%, 5% or 4% or less, the most popular response for China’s current GDP growth rate was just 5%, and the majority expect a sharp slowdown of 1-2 percentage points in H2 2015 from H1.”
“The largest near-term risk is capital flight, and if a large policy tool is needed before end-2015, it is likely to be fiscal expansion.”
“Expect RMB to depreciate further, with spot USD/CNY ending this year at 6.40-6.80. Consistent with this, a large majority see USD/CNY fair value at 6.40-7.10.”
”In the equity market, there are clear signs of pessimism. The preferred vehicle for China equity exposure is H-share single stocks.”
(Market News Provided by FXstreet)