UBS are not impressed by the stimulus announcement from China on Tuesday. In summary from the note :
- announcement signals a positive move toward a more supportive approach
- but it doesn't match the scale of past stimulus efforts that triggered sustained market rallies
- monetary easing by itself won't be enough to end the current cycle of deflation and deleveraging
- greater fiscal support is necessary
- more fiscal stimulus could be introduced in October through a budget revision, particularly if third-quarter GDP remains significantly below the 5% mark
On FX, analysts at the bank recommend hedging exposure the the yuan on approach to US election. Their 'most preffered' is the Australian dollar, it'll benefit from China's measures.
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Earlier:
- Economists says 'No' to China's blitz of economic stimulus measures, its 'not enough'!
- China Stimulus sparks global growth expectations, but raises inflation risks again
- Boosting China's Economy: JP Morgan Outlines Key Policy Needs
