In China, monetary easing continues. In contrast to the recent shift toward talk of easier monetary policies among the G3 central bankers, China’s economy is alone among the world’s major economies currently in actually benefiting from a relaxation of monetary policy.
Indicators such as the credit impulse are recovering (see exhibit 1 below).
Sino-US trade tensions remain a concern for investors, but unless there’s a sudden deterioration, the stars may slowly be aligning favourably again for emerging-market assets.
In 2015/2016, Chinese monetary easing had powerful implications for emerging-market assets, albeit with a lag. Easier monetary policy was also as an important driver for macroeconomic developments across developed markets then.
While efforts to ease the monetary stance by China’s policymakers are currently more modest and targeting specific areas, we are monitoring their policies closely as a possible game changer.
Exhibit 1: Credit impulse data signals that China is once again easing monetary policy
Source: Bloomberg, BNPP AM; as of 28/06/2019
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