PBoC likely to cut rate further

China's PMI data for October show that conditions in the manufacturing sector remained weak in October. The official manufacturing PMI came in at 49.8. Caixin manufacturing was firmer than expected at 48.3, reflecting accelerated easing in recent months.

The official services sector expanded at a slower pace, the slowest since 2009 and bears monitoring. 

"On Sunday, Premier Li Keqiang unveiled a 6.5% annualised GDP growth target for the next five years (from a target of 7% for 2010-2015). We continue to expect one more cut to the 1-yr lending rate in 2016. There is more scope to cut the RRR and we look for another 200bps of cuts to 15.5% in 2016. The risk is that some easing comes before year-end", forecasts RBC Capital Markets.