Credit Agricole: China targets for economic expansion
Quotes from Credit Agricole The growth target for 2015 has been cut to "around 7%". We believe that Beijing will achieve this less ambitious goal. Plans to allow the RMB "to float more freely" will likely be expressed vi…
The growth target for 2015 has been cut to "around 7%".
We believe that Beijing will achieve this less ambitious goal.
Plans to allow the RMB "to float more freely" will likely be expressed via higher volatility of USD/CNY fixing rather than band widening. We recommend long USD/CNH positions.
The higher government budget-deficit target, 2.3% of GDP, may lead to wider bond-swap spreads.
Fiscal easing takes the pressure off the PBoC; however, the CPI objective has not been lowered much and remains high at 3.0%.
This leaves room for more monetary easing, although we expect RRR cuts rather than policy-rate reductions. We recommend receiving 1Y CNY IRS and ND IRS.
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