Shares set to lower; profit reports to dominate this week; Altium, Breville, Chorus, IAG scheduled today. Follow updates here.
In a weekend note, “How to boost confidence”, Goldman’s Asia economics team led by Hui Shan said it was still hopeful for China’s economy though wary too.
“Our baseline expectation remains a modest improvement in sequential growth from the second quarter to the second half given increased policy support and a reduced drag from inventory destocking. “We now expect two more 25 basis point reserve requirement ratio cuts and one more 10bp rate cut before year-end, the approval of RMB500 billion additional local government special bond issuance, and intensified property easing in top-tier cities.
“Even with these increased policy offsets, risks are skewed to the downside to our full-year GDP growth forecast of 5.4 per cent given the ongoing property downturn.” Goldman said while “idiosyncratic factors may have exaggerated the weakness” in July, including the payback effect after the quarter-end credit push by banks in June and the heaviest rainfall in 140 years in northern China in late July, “the overall picture of sluggish demand remains intact”.
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