Bankinter | China’s central bank (PBoC) lowers the one-year interest rate to 3% from 3.10% previously. The 5-year rate is cut to 3.50% from 3.60%.
Bankinter analysis team’s view: The central bank is once again taking action, with the aim of reactivating the economy. On 7 May it cut the 7-day repo rate to 1.40% from 1.50% and the reserve requirement for banks to 9.0% from 9.5%. It also announced that it will help listed companies affected by the tariffs, although without providing concrete measures.
So, further stimulus, although we estimate it will have a moderate impact. China is suffering a weakening of its economy, which is already visible in its real estate market (Housing Investment YTD down 10.3% year-on-year April), private consumption is slowing down and inflation is in negative territory (CPI year-on-year April down 0.1%). Added to all this is the impact of the trade war. In this context, we reiterate our recommendation not to take positions in China.
