Economics: HSBC China Manufacturing PMI (March, Final): Still weakening

The HSBC China Manufacturing PMI came in at 49.6 in the final reading for March. It is revised up from the flash reading but still signalling contraction. It is also lower than the average reading of Jan-Feb 2015, suggesting that the economy continues to weaken amidst soft domestic demand and uncertain external outlook. Recent policy actions such as the easing of mortgage rules suggest that policy-makers' concerns over the slowdown in growth and inflation are intensifying. We expect a further 50bps cut to the policy rate and 200bps cut to the reserve ratio for the rest of 2015, and for the next easing move to take place in the coming weeks.