Head of China Research - Forsyth Barr Asia, Forsyth Barr Asia

David Millhouse

Head of China Research - Forsyth Barr Asia

Forsyth Barr Asia

Macroeconomics

<p>We are calling for another rate cut and 3 further 50 bps cuts of the reserve requirement ratio in the first half of 2015, with the next rate cut being an increasing chance of late March (vs our original expectations of late Q2). In addition to&nbsp; a cut in lending rates, we believe there is a growing need to cut deposit rates further, if the current deflationary pressures remain. The central bank will desperately want to avoid a period of negative real rates, due to the detrimental effect it could have on consumption and investment.<br></p>

We are calling for another rate cut and 3 further 50 bps cuts of the reserve requirement ratio in the first half of 2015, with the next rate cut being an increasing chance of late March (vs our original expectations of late Q2). In addition to&nbsp; a cut in lending rates, we believe there is a growing need to cut deposit rates further, if the current deflationary pressures remain. The central bank will desperately want to avoid a period of negative real rates, due to the detrimental effect it could have on consumption and investment. 

Haitong Securities Co Ltd (A) (600837 CH)

Chongqing Rural Commercial Bank (3618 HK)

Shanghai Pudong Development Bank Co. (600000 CH)

China International Capital Corporation (3908 HK)

China Financial Services Holdings (2980 HK)

China Merchants Securities Co Ltd (A) (600999 CH)

China Pacific Insurance (Group) Co., (601601 CH)

Flying Financial Service Holdings (8030 HK)

China Huirong Financial Holdings (1290 HK)

Changjiang Securities Company (000783 CH)

China Merchants Securities Co Ltd (H) (6099 HK)

Shanghai Stock Exchange Composite Index (SHCOMP INDEX)

CHINA MACRO: Brining forward our expectations of monetary easing