Halister News

(Bloomberg) -- Policy makers are expected to keep both monetary and fiscal policies expansionary in 2H, given the cooling housing market and slowing private investment, HSBC economists Jing Li and Julia Wang write in note today.

• Better-than-expected money supply data in June is reflection of stronger policy effort to stabilize economic growth
  • Sharp increase in mid-to-long term corporate loans likely financed infrastructure investment
  • Taking into account municipal bond issuance, actual degree of policy support is even bigger
• Accommodative monetary conditions supported fiscal expansion, contributing to today’s upside surprise for 2Q GDP and June activity data
• Further easing is necessary as property sales continue to soften, private sector investment may extend decline in near term, and the external outlook remains uncertain
• Forecasts another 50 bps policy rate cut and 350 bps of reserve ratio cuts in 2H