In view of analysts at ANZ, China has paved the way to provide more stimulus to the economy amid concerns about a protracted trade war and the takeover of Baoshang Bank, both of which have caught the markets off-guard lately.
“Since last Friday, the Chinese government has announced two measures to support domestic consumption and investment. In the financial markets, the People’s Bank of China (PBoC) has made efforts to ensure market liquidity, especially for smaller banks, in the wake of the Baoshang Bank takeover.”
“While China is readying itself for prolonged trade tensions with various policy measures recently, the market will be watching closely the G20 Summit in Japan (28-29 June) as it poses a near-term key event risk.”
“The most optimistic scenario at the upcoming G20 would be a truce similar to last December’s G20 in Argentina, in our view. On the other hand, under the worst-case scenario, negotiations will remain at an impasse with no agreement on key principles and the US proceeds to apply an additional 25% tariff on USD300bn of Chinese imports.”
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