China: Stabilization in equities - BBH

Analysts at BBH note that Chinese stocks stabilized after yesterday's sharp fall, and the Shanghai Composite and the CSI 300 posted fractional gains.  

Key Quotes

“Yesterday's rout did not rattle global investors, but the steadier note today is seen as a constructive development.  The MSCI Asia Pacific Index rose for the fourth session and finished the week with a nearly 1.6% rise.  In so doing, it recouped fully last week's loss.  The benchmark has posted only three weekly losses since the first week of July.”      

“Chinese officials surprised investors by announcing a cut in the tariff (tax on imports) for a wide range of consumer goods.  The average tariff was cut from 17.3% to 7.7% effective December 1.  While may read this as an attempt to placate the US, the bilateral trade balance (China runs ~$370 bln surplus)  is unlikely to be impacted very much. US exports, which are near record levels, tend not to be consumer goods, but semi-finished goods and capital equipment.”