TD Securities: Rate Cut To Offer Limited Support

TD Securities note that “while China's approach over recent months has been more targeted, the cut in the MLF highlights that the authorities are becoming more concerned about the growth trajectory. While the lifting of many Covid restrictions have helped, the pressure on the property developer sector and housing market activity has intensified, threatening recovery prospects. However, we don't expect a series of rate cuts ahead given concerns over leverage and instead think policy is likely to remain targeted. Moreover, the PBoC is also likely cognisant of cutting rates at a time when most countries are hiking though China's largely closed capital account offers some protection on this front.”