There is no doubt that whenever financial markets get a sense that the Chinese authorities are poised to apply more stimulus to stabilise and boost growth that...

There is no doubt that whenever financial markets get a sense that the Chinese authorities are poised to apply more stimulus to stabilise and boost growth that a positive market reaction is assured. However, the key for investors is to determine whether China's recent growth moderation is cyclical or structural. China currently has a growth target of +7.5%, which it can only hit with additional stimulus or asset bubbles, neither of which are sustainable. Therefore, while the PBoC has more stimulus to unleash in the form of either lower official interest rates or reserves ratio requirement (which are likely in early 2015), investors should not expect a sharp rebound in Chinese growth. Instead, the measures announced on Friday night are meant to reduce downside risks to growth and won't spark sustained rises in consumer spending, commodity prices or regional trade. (VIEW LINK)