Goodbye China Downgrades, Hello Upgrades

by swisscham in Bank, Finance, Insurance

Hear that? It’s the sound of the world’s biggest investment banks hitting the paper shredder on gloomy forecasts for China’s economic growth this year. Credit Suisse joined in on Monday, raising its growth target for this year to 7.6% from the 7.4% it set in June, which was a downgrade from a previous forecast of 8%, while Barclays also said that growth may have accelerated this quarter from the previous three months. The upgrades so far are modest, although still striking considering it was just earlier this summer that that many brokers were rushing to cut forecasts ahead of what was then a widely expected slowdown in China’s second-quarter growth. Much of the optimism has been sparked by the signs this month of surprisingly strong manufacturing activity, a key part of the world’s second-largest economy. That adds to a raft of strong data as well as indications of a willingness at the top levels of government in Beijing to avoid a sharp economic slowdown.”We believe that the Chinese economy has bottomed,” Credit Suisse economist Dong Tao wrote in a note to clients on Monday. “The upward momentum may not be strong, but stabilization itself would be good news, given how bearish the market is about China’s outlook.”

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