As the chart below illustrates, Chinese inflation has risen above levels where over the past five years Chinese authorities reacted with significant hikes in the country’s benchmark deposit rate. Yet, Chinese authorities may delay a hike, at least for the moment, to measure the effectiveness of targeted policies at the property sector and several increases […]
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Asia/China
Europe’s rapidly escalating out-of-control debt crisis has brought about a rare occurrence, solidarity amongst its members; an elusive attribute in the European experiment. Eurozone members, who have worked tirelessly over the weekend, appear to have agreed on creating a $645bn loan package to help defend its currency and stymie fears of Greek contagion to other […]
The wheels of tightening may be gaining momentum in China, after February’s higher than anticipated inflation release. High inflation leading to negative real deposit rates may entice investors to withdraw deposits and invest in more speculative assets, potentially spurring what is arguably already a bubble in the country’s housing sector. I believe that China has […]
Since the start of this year I have been a proponent of the belief that China will once again begin to gradually appreciate their currency as exports recover, and inflation begins to creep back into the Chinese economy. As the chart below illustrates, investors in the CNY NDF market appear to share this view. But, […]
While all eyes remain on Greece, Japan’s fundementals continue to weaken, and in some instances look worse than Greece. There are of course numerous technical and economic differences between the two nations; however, I do not believe Japan’s current deficits and debt load will be sustainable without drastic changes. This is an update from my […]
Judging by the market’s reaction, investors were blinded sided today when Chinese officials increase their reserve requirement ratio for the second time during its renewed tightening cycle. But, really the only surprise was that the hike occurred just prior to the Chinese New Year, which is a week long holiday. I have been stating for […]
According to the China Securities Journal, Chinese banks lent almost CNY1.4 trn in new loans during January–third-largest monthly total on record. This was less than the CNY1.6 trn some outlets has been speculating on, but far more than what I expect the government would have liked. But, considering that it was reported that CNY1.1 trn […]
According to the China Securities Journal Yao Jingyuan, chief economist of China’s National Bureau of Statistics, said “Money supply is too big and that’s leading to excess liquidity.” He went on to say, “I would prefer reserve hikes to rate hikes because rate hikes could cause hot money to flow back.” Jingyuan’s comments are further […]
Concerns over the future impact Chinese policies could have on the real estate sector have nearly halted transactions in the sector as buyers expect prices will begin to fall. According to the China Securities Journal, the volume of second-hand property transactions fell nearly 70% m/m in January, with new sale transactions falling by more than […]
Following up on my comment from early this morning, Uncertainty of Chinese Tightening Continues to Weigh on Asian Markets, I wanted to mention that, surprisingly, the Chinese central bank, during its regularly scheduled Tuesday auction, did not increase the yield on its one-year paper, keeping it constant at 1.9264%. It is widely expected that once […]