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By Chi Lo, Senior Economist, Greater China, BNP Paribas Investment Partners
I do not intend to paddle with more noises than what have been circulating in the market after PBoC announcement of 25bps interest rate cuts (for both lending and deposit rates) and 50 bps selective RRR cut. But there are a few issues relevant to both Chinese stocks and bonds that I want to share my thoughts on; they may be different from what other players see.
First, the double-dose monetary easing (interest rate cut + RRR cut) is not a sign of policy panic by Beijing, in my view, after the 18.8% drop in A-share prices in just two weeks between 12 and 26 June. Some may call the easing a “PBoC put” to salvage the stock market to prevent a potential systemic risk,...
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