China growth and output are still concerns - Nomura

Analysts at Nomura explained that China growth and capital outflow concerns remain our main focus in Asia following the run of weaker China PMI releases and April import data.

Key Quotes:

"Near-term slower growth concerns could intensify following the People’s Daily news (9 May) quoting an “authoritative” person that the growth trend should be ‘L-shaped’ and the government should avoid using stimulus to raise investment. This has followed on from Vice Premier Zhang Gaoli’s comments (11 May) that M2 growth slowed in April (data to be released before 15 May).

We believe the market will price in more downside China growth risks again, which could see a pickup in net capital outflows. We note that outflows continued for the sixth consecutive month in the adjusted April FX reserves and the release of the Q1 BOP data. This has raised our conviction to build on our existing long USD/CNH position."