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Something positive from China? - Nomura

FXStreet (Guatemala) - Despite the bearishness around the Chinese economy, analysts at Nomura actually noted that the October activity data point to somewhat stabilising growth momentum.

Key Quotes:

"Industrial production growth ticked down to 5.6% y-o-y in October from 5.7% in September, slightly below expectations (Consensus: 5.8%; Nomura: 5.7%). Fixed asset investment weakened further, with its growth slowing to 10.2% y-o-y (ytd) from 10.3% in September, in line with market expectations (Consensus: 10.2%; Nomura: 10.0%). This was dragged down mainly by lacklustre property investment growth, to 2.0% ytd y-o-y from 2.6%.

Consumption continues to be the bright spot. Nominal retail sales growth edged up to 11.0% y-o-y from 10.9% in September (Consensus: 10.9%; Nomura: 10.8%), despite lower CPI inflation. In real terms, retail sales growth rose to 11.0% y-o-y from 10.8%.

With non-financial sector growth stabilising at a low level and outsized financial services’ contribution to growth fading, we maintain our forecast for real GDP growth slowing to 6.4% y-o-y in Q4 from 6.9% in Q3.

We continue to expect a moderate fiscal stimulus from the central government and an accommodative monetary policy stance, though policy easing will likely slow after the “double cut” (to the benchmark policy rate and the reserve requirement ratio (RRR)) in late October. We forecast four RRR cuts (of 50bp each) and two benchmark interest rate cuts (of 25bp each) in 2016."

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