China stimulus likely to be ‘modest’ in no major boost for market, but earnings will surprise, Cambridge Associates says

China’s widely expected stimulus package will be “modest” and unlikely to trigger a monster stocks rally, but investors can expect an earnings upside in the second half as the economic recovery is still intact, said senior officials at Cambridge Associates, a US investment firm which has over US$548 billion in assets under management.

Beijing is likely to roll out targeted measures to put a floor under the struggling property sector, said Aaron Costello, Regional Head for Asia at Cambridge Associates. But broad stimulus such as interest rate cuts will not happen any time soon, as the massive local government debt burden and the rising US Fed interest rate trajectory leaves little room for easing, he said.