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Chinese Liquidity Replies |
rffrydr
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 Posted: Thu Jan 27, 2011 10:20 am Post subject: |
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The 7-day deposit rate rose 52.8 bps over night to 8.34% -- there continues to be a liquidity
squeeze. The yuan was stable.
· PBOC Li Daokui said that interest rates need to rise and the yuan needs to strengthen to fight
inflation. He believes the yuan should rise 5% annually.
· PBOC governor Zhou Xiaochuan said that financial instruments like stocks and bonds could boost
household incomes in the futures. There is some talk that the tax and slowing of real estate will
shift funds to equities.
· Shanghai has announced a property tax rate of 0.4% to 0.6%. Chongqing is also expected to
announce its property tax today.
· The MOF said that the property tax
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rffrydr
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| Posted: Wed Jan 26, 2011 10:37 am Post subject: |
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The HKMA says it will buy EM market securities including Chinese stocks and bonds to diversify its FX reserves.
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HenryTo
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| Posted: Fri Jan 14, 2011 10:22 pm Post subject: |
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Bridgewater on China's latest tightening attempt:
| Quote: | | The PBOC raising bank reserve requirements by another 50bps starting January 20 was not a surprise. By tightening reserve requirements they are attempting to neutralize some of the expansion in liquidity that results from unsterilized interventions by incrementally constraining banks' ability to lend, but this doesn't notably change the economics of borrowing at very low interest rates in an economy that is growing at a very fast pace. So while this is a step in the right direction, we believe that much more fundamental changes in policy will be needed to contain growing inflation pressures. |
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rffrydr
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| Posted: Wed Dec 29, 2010 9:30 pm Post subject: |
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Why the hike? Is this a "capitulation"?
| Quote: | | “We introduced about 15 measures this year but it appears that they were not well- implemented,” said prime minister Wen Jiabao on December 27th. “I believe that after some time, the home market will return to a reasonable level with our efforts.” |
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rffrydr
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| Posted: Mon Dec 13, 2010 9:22 am Post subject: |
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Why no hike?
| Quote: | The remainder of Saturday’s data covered retail spending, fixed investment and industrial output. As
with the trade data, released on Friday, they were all strong. Policymakers do not need to fear that
tightening would result in a hard landing. Yet they appear in no hurry to raise interest rates. We can
think of three possible explanations, each of which probably applies to some degree. First, officials may
be concerned that rate hikes would draw in more speculative capital from overseas. This is an argument
we have disputed in the past, on the grounds that capital controls are still fairly effective, but it is taken
seriously in Beijing. Second, officials may feel that interest rate hikes are an inefficient policy tool and
that reserve requirement (RRR) increases, open market operations or even currency appreciation can
achieve more. Small rate increases make next to no difference to loan demand in China since
benchmark lending rates are so low. As a result, bank lending has to be restricted by quota. However,
this is arguably a reason to raise rates to levels at which they actually matter rather than keep them on
hold. Finally, it may be that officials do not share market concerns that inflation could be spiralling out of
control. Indeed, what tightening has been introduced recently, in the form of RRR increases, has been
offset by steady injections of funds into the banking system by the People’s Bank, which implies that
RRR moves are being used primarily as a signalling tool. Bloomberg is today reporting that the lending
target for 2011 will be set at RMB7trn, which is at the high end of most expectations. The statement
released on Sunday following the high-level “economic work meeting” to decide next year’s policy
priorities certainly does not give the impression that fighting inflation is now a standout concern. The
most notable sections of the statement focus on the need to redouble efforts to restructure the economy,
boost employment and improve livelihoods while not “blindly pursuing” rapid GDP growth. (No targets
were announced in the statement for 2011 GDP growth, lending or inflation either.) |
--Capital Economics
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HenryTo
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| Posted: Fri Nov 12, 2010 10:59 pm Post subject: |
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Following courtesy of Reuters--week ending November 12, 2010:
| Quote: | | RECORD FOLLOW-ON OFFERING FOR CHINA: Bolstered by the $8.98 billion follow-on offering from Bank of China Ltd, secondary activity in China has reached $46.5 billion, up 118% from the same period last year and the highest level since the same period in 2007 which saw total proceeds of $56.8 billion. This latest offering from Bank of China is the largest secondary offering on record for China just passing the previous record set by PetroChina in October 2007 with total proceeds of $8.93 billion. |
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rffrydr
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rffrydr
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| Posted: Thu May 06, 2010 12:42 pm Post subject: |
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As intimated here before, the only ones truly hedged this market have been the chinese and their long, long.....long position in the treasuries. Whattya think a couple trillion from 4% to 3% does for china story, Master H?
Throw in $70 oil....party on????
I don't think so.
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rffrydr
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rffrydr
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| Posted: Wed Mar 03, 2010 8:25 am Post subject: |
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China's shadow banking system:
http://www.bloomberg.com/apps/news?pid=20601089&sid=aN94MF7BDx_A
| Quote: | | By Shih’s count, China’s debt may reach 39.838 trillion yuan ($5.8 trillion) next year. His forecast for debt-to-GDP compares with an International Monetary Fund estimate for China of 22 percent this year, which excludes local-government liabilities. The IMF sees Spain at 69.6 percent, the U.S. at 94 percent, Greece at 115 percent and Japan at 227 percent. |
And on a related note:
http://www.bloomberg.com/apps/news?pid=20601089&sid=alQA.5emKpbY
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HenryTo
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rffrydr
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| Posted: Fri Feb 12, 2010 7:38 pm Post subject: |
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Hope so. In a surprise to me made the front pages. And we selloff into improved retail sales.
Have we really given in that far? Maybe there's a bigger turn here. Pebble Beach anyone?
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HenryTo
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rffrydr
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rffrydr
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| Posted: Thu Jan 21, 2010 7:51 am Post subject: |
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Maybe not so slowly:
| Quote: | Michael McDonough
Local Press Discussing Possible Surprise Chinese Rate Hike on Friday
1/21/2010 12:36 AM EST
My sources in China have notified me that a reputable Chinese business paper, the 21st Century Business Herald, has begun reporting on a market rumor indicating the Chinese Central Bank may be planning a 27bp rate hike this Friday. I personally know very little about the paper, and believe this news is highly speculative. Many analysts do not anticipate a move by the Chinese Central Bank until the Fed begins to hike in order to avoid an inflow of speculative capital. However, considering the recent pace of Chinese tightening this rumor can not be completely discounted. After yesterday's sell-off it will be very important to pay attention to any developments stemming from this story. After receiving the news I spoke with some money managers on the ground in China, and their first reaction was given what is presently available "it's hard to comment".
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Why wouldn't you expect the chinese to lead? Forget economics, it's the "chinese century."
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