China inflation data highlighted need for further monetary easing

China CPI inflation eased from 1.5% y/y to 1.2% y/y (consensus 1.3%) and PPI inflation held at -4.6% y/y (consensus -4.5% y/y). Data again highlighted the need for further monetary easing amid weak domestic demand, notes RBC Capital Markets 

Later tonight, MSCI is scheduled to announce whether it will add China's A-shares into its Emerging Markets Index, which is tracked by ~USD1.7trn in funds. RBC Capital Markets think that MSCI will add China A-shares to its Emerging Markets Index, but with a progressive inclusion factor, whereby the starting weight is small, and subsequent increases in the weight will be conditional upon further liberalisation of China's equity markets. This would also limit the volatility as eligible funds increase their exposure.