ANZ note that "May's soft patch was mainly....>

CHINA: ANZ note that "May's soft patch was mainly seen in retail sales and

investment. We expect (Chinese) GDP growth to slow to 6.7% y/y in Q2 from 6.8%

in Q1, followed by an average growth of 6.3% in H2. There are some positive

signs in the economy, which prevent us from being overly pessimistic about the

economic outlook. Notably, the manufacturing sector continued recovering and the

property market rebounded. An unexpected drop in May's total social financing

(TSF) reflects an easing in the shadow banking sector. This is a clear sign of

structural deleveraging. The PBoC stayed put on 14 June, uncoupled from the

Fed's rate hike. We now expect it to resume hiking rates (5bp) in Q4, taking the

7-day reverse repo rate to 2.60% by the end of 2018 (our previous forecast was

2.85%). We maintain our forecast that the PBoC will cut RRR in the near term to

support interbank liquidity."