The initial request by the US, that Chinese imports rise by US$200bn is already borderline unrealistic.” The recent China PMI figures shows that manufacturing is contracting. Thus monetary policy support will continue, but demand from the real economy is not catching up. If the trade issue escalates, there will be more earnings cuts in the future. Offshore markets will be affected by Rmb depreciation. Stick to consumer sector, with strong domestic demand is good, dividend plays, such as utilities but not banks because of the low interest rate environment.
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