China's June data to show growth momentum

China's June data showed improving growth momentum. This should offset most of the drag that might be caused by the stock market correction in the near term, assuming the government is able to stabilise equity prices around the current level. 

"Also because both onbudget and off-budget fiscal support is finally stepping up, a pause is expected in headline monetary policy easing in Q3", says Societe Generale. 

The PBoC might not use monetary policy easing measures only for the sake of the stock market, given that PBoC is already providing it with targeted liquidity injections.

"Given that Q2 GDP growth was 0.2ppt better than the forecast, it is necessary to revise up the forecast from 6.8% yoy to 7.0% yoy for Q3 and from 6.6% yoy to 6.8% yoy in Q4. Consequently, annual growth would be 0.1ppt higher than initially anticipated at 6.9%", added Societe Generale.