Expect more easing measures from Chinese central bank: JPM AMC

Ian Hui, Global Market Strategist at JPMorgan Asset Management in an interview to CNBC-TV18 spoke about the likely causes for rout in Chinese market and the expected action.He expects the Chinese central bank to ease because the Chinese economy is still weak and because the reserve requirement ratio and real interest rates were still quite high compared to historic levels.Below is the verbatim transcript of Ian Hui's interview with Nigel D'Souza and Ekta Batra on CNBC-TV18.Ekta: What are the cues that we need to be working with from China? Are we going to see some recovery today and what are the triggers that we need to keep focused on?A: Not a great start to the market. So quite a lot of attention put on China to see what is going to happen. So I think there is quite a number of items that would have caused the China market drop and that we have to keep an eye on to see if there is going to be any recovery.First of was the sort of poor showing in the current purchasing managers' index (PMI) manufacturing index which came in at a bit lower. Also it was rumoured that there was going to be an end to the suspension that we saw of a number of large financial institutions being able to sell their shares on the markets that was bought in sort of last year during the height of China's market downturn -- that was rumoured to be ending on Friday. So I think a lot of people would have panicked thinking that a lot of these large financial institutions would sell off and also sold in the markets.Of course that sort of kicked in the circuit breaker that we saw caused the stop in trade after the market dropped 5 percent yesterday and then after the market dropped further 7 percent in total that caused the markets to suspend. I think compared to a lot of other markets that our circuit breaker level probably is quite significantly bit lower than compared to other markets so we might see some adjustments of that 7 percent level.Also probably have to keep an eye on all the further Chinese numbers. As I mentioned before, the PMI was a bit disappointing especially when compared to some of the other numbers we saw come out at the end of last year, which might have suggested that China was planning to stabilise but these PMI number has once again disappointed. So we will probably be keeping an eye on the other numbers that are going to come out later in the coming week. We have the new loans and the loan growth coming out later but probably keeping the close eye on the Chinese economy.Nigel: Have you heard any kind of commentary coming out of the Chinese regulators because that is going to be crucial in the next couple of days that ban that was imposed six months ago does come off and secondly, you have told us in the past that maybe given the rate hikes that will be coming out of Fed, you prefer developed markets more than emerging markets?A: As I mentioned before, we might see some adjustment of the circuit breaker. That at the moment we are still waiting and seeing. We do expect more easing measures from the Chinese government or the Chinese Central Bank to come through. The Chinese market is still fairly weak. We still do expect more easing especially when compared to history if you look at the reserve requirement ratio and the real interest rates. It is still quite high compared to the historic levels. So we still see some more action then.