China: PMI lower but moderate recovery on track – Danske Bank

Danske Bank analysts point out that the Chinese PMI came out weaker than expected today but the rebound in March data was probably too good to be true and some correction in April was to be expected.

Key Quotes

“We should expect the same in other April data coming up. Hence, the positive surprise from China is probably behind us for now, leaving more of the burden of recovery evidence on other regions. We still expect a recovery in China, but the numbers support the case that the recovery will be moderate.”

“The weaker numbers will keep the hope of further monetary easing alive in markets, so the numbers may not be that negative for Chinese stocks or global stock markets. We see a 50-50 chance of a broad-based cut in the Reserve Requirement Ratio, as China needs to weigh the short-term need for more support to the recovery against the long-term goal of financial stability and not fuelling financial leverage in markets.”