China Business Confidence Falls: Morgan Stanley
Business confidence is declining in China as 26% respondents surveyed by Morgan Stanley expected worse conditions in the next 1-3 months, the most since the survey began. The percentage was 17% in May, Morgan Stanley says in its latest China Pulse report. 75% of respondents believed China's policy environment would remain unchanged over the 1-3 months, according to the report.
China Aims to Deleverage
The People's Bank of China's non-action against strained liquidity last week sent a clear message that banks must be responsible for their liquidity management, DBS says in its latest Regional Morning Pack report. Reduced liquidity in the interbank market could hamper banks' ability to make payouts when wealth management products mature every month, but this market condition alone will not necessarily deter banks from making risky lending. The Chinese government is likely to announce more measures to reform an economic system that is too dependent on leverage, the DBS report predicts.
4G Licensing to Favor TD-LTE
In a turbulent economic environment, an early 4G licensing and the kick-off of 4G capital expenditure are welcomed by the Chinese government to divert investment from the infrastructure sector, JPMorgan says after meeting with the Ministry of Industry and Information Technology and state-owned assets regulator. The majority of capital expenditure will go to wireless and fixed-line broadband networks as an investment to underpin growth with less spillover effect on inflation, according to JPMorgan's latest China/Hong Kong Daily Views report. The report predicted three TD-LTE licenses would be issued by end of the year, which would be positive to China Mobile Ltd (NYSE: CHL, HKG: 0941).
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