China Macro:Comments on a targeted RRR cut

The PBoC announced a targeted RRR cut for some banks. The cut will becomeeffective from 2018. We do not take this as a shift of monetary policy stance.Instead it is a step to offset the tightening effect from macro prudential regulation.We believe the monetary policy stance will stay neutral in Q4, with money marketrates broadly unchanged from their Q3levels. We expect growth to slow onlymoderately and gradually in Q4. The monetary policy stance will likely loosen inH12018when economic growth faces more serious downward pressure.