Three quick hits from Bloomberg, December 4 and 5:
China Warns Against ‘Worship’ of Chasing Faster Economic Growth
Chinese state media warned against blindly chasing faster growth and signaled more focus on boosting consumption in a flurry of articles setting the stage for a key economic meeting next week.
While officials have made every effort to hit this year’s expansion goal, coming in “a little to the left or right” of that around 5% target would be “acceptable,” the official Xinhua News Agency wrote in a commentary late Tuesday, in an apparent attempt to manage expectations.
“If we do not get rid of the ‘worship of speed’ mindset and are addicted to building more projects, even if we can temporarily lift the pace of the growth, we will be taking an overdraft from the future,” the report continued. “It’s not that we cannot grow faster — it’s a question of whether we should.”...
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Morgan Stanley’s Wang Says China at Risk of More Earnings Misses
- Valuations for MSCI China Index to stay at current levels
- It will take at least two years to exit deflationary spiral
Corporate earnings in China may continue to underwhelm as the measures taken by Beijing so far are insufficient to reverse the deflationary trend gripping the economy, according to Morgan Stanley.
“We already had 13 quarters of consecutive earnings miss, and we expect the upcoming fourth quarter results to be another miss,” Laura Wang, chief China equity strategist at the firm, said in an interview on Wednesday. “Without very meaningful policy stimulus, the next two quarters could be earnings miss as well.”...
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Wall Street Banks Predict Biggest China Rate Cuts in a Decade
- Borrowing cost seen easing to counter US tariffs, weak demand
- But analysts see PBOC short of rates ammo, fiscal steps needed
China’s central bank will deliver the biggest interest-rate cuts in a decade next year as policymakers intensify efforts to shore up growth and arrest deflation, in the view of a number of Wall Street banks.
Goldman Sachs Group Inc. and Morgan Stanley are among those projecting cuts of 40 basis points to the People’s Bank of China’s main policy rate in 2025. That would be the largest reduction in a calendar year since 2015, taking the seven-day reverse repo rate down to 1.1%. The median forecast in Bloomberg’s most recent survey was for 30 basis points of cuts.
Wall Street brokerages have turned more cautious on Chinese stocks in recent weeks, given growing doubts over the strength of the government’s support and the renewed risk of geopolitical tensions following Donald Trump’s win in the US presidential election. Morgan Stanley last month reduced Chinese equities to a slight underweight within the region, citing stronger headwinds on corporate earnings....
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