China May Ease Tightening Policies in Early 2012, Shenyin Says

China may relax tightening policies in the first or second quarter next year as the slowdown in economic growth will likely exceed market expectations and the inflation rate eases to the government’s target, according to Shenyin & Wanguo Securities Co.

The Chinese economy may grow more slowly than expected because of a slowdown in the global economy and government measures to curb the property market, analysts led by Li Huiyong wrote in a report today.

Inflation rates may slow to around 4 percent in April next year, it said. The government may first lower reserve requirement ratios for small- and medium-sized financial institutions and increase investment to “structural change” areas of the economy, according to the report.

China’s Shanghai Composite Index may trade between 2,300 and 2,700 in the fourth quarter, Ling Peng, a strategist at the brokerage, wrote in the report today. Shenyin & Wanguo recommends consumer-related stocks and financial companies.

To contact the editor responsible for this story: Gregory Turk at gturk2@bloomberg.net

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