China Economic News

[greengiraffe]

Its just a typical China casino - Banker vs greedy players... the cycle will go on & on... no worries

Shanghai stocks slump amid margin loan fears
[Mainland China's main equity index has closed more than 4 per cent lower, amid reports that domestic stockbrokers are pulling back from lending clients money to buy shares, as regulators become increasingly concerned about the fierce nature of a recent stock-market rally.

The Shanghai Composite, which has increased in value by almost 120 per cent over the past year, fell 4.1 per cent to 4,308 points. That is the index's biggest drop since January 19, and the seventh biggest fall over five years. ]

[The management team of Chinese online video company Beijing Baofeng Technology urged the public to "invest rationally", after its stock jumped by 44 per cent on the first day of trading on the nation's mid-cap market in the wealthy southern Chinese city of Shenzhen. ]

[As RBS strategist Alberto Gallo wrote in a late-April note:
Housewives, taxi drivers and street vendors busy trading stocks are common sight in China these days. It appears the banana guy has a few friends, around 12 million who opened A-Share trading accounts since March 20, and after the government allowed investors to hold multiple accounts with different brokers in early April.]
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Another exciting day on SSE! If only SGX was so exciting...

[greengiraffe]

$ no enough so must be friendly to foreigners... nothing new since playing field always not level in China

http://www.ft.com/cms/s/0/41502188-f22d-...ab7de.html

Last updated: May 4, 2015 11:32 am
China widens foreign access to domestic bond market
Gabriel Wildau in Shanghai

Traders on the floor of the Hong Kong Stock Exchange perform various tasks in early trade Monday, August 4, 2003. Stock markets in Hong Kong and Singapore have lagged this year's rally in Asian shares. They may catch up in the second half, according to Norman Villamin, Asia-Pacific strategist at Morgan Stanley. Photographer: Michael Caronna/Bloomberg News©Bloomberg
China has approved HSBC, Morgan Stanley and 30 other foreign institutions to invest in its $5.9tn domestic bond market, a big step towards opening its capital markets to foreign investment.
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China has significantly expanded foreign access to its stock market in recent years, but liberalisation of the domestic bond market — the world’s third-largest, behind the US and Japan — has proceeded more slowly.
Economists say loosening restrictions on bond investment is crucial if China wants to persuade international investors to store their savings in renminbi. Heavyweights such as central banks, sovereign wealth funds, insurers and pension funds have portfolios heavily weighted towards fixed income.
The approvals also come as China’s slowing economy and falling domestic interest rates spur capital outflows. Expanding inbound bond investment could help hedge against this.

Standard Chartered estimates that more than 50 central banks already hold some renminbi bonds among their foreign currency reserves.
Many of these hold “dim sum” bonds traded in Hong Kong, which do not require Beijing’s approval, but foreign holdings of onshore bonds are also on the rise. Offshore institutions held Rmb579bn ($93bn) in interbank bonds by the end of March, up 44 per cent from a year earlier, according to data from China’s two main bond clearing houses.
The People’s Bank of China issued rules in 2013 allowing institutions that had already been approved to buy into domestic stock exchanges to apply for access to the interbank bond market, where more than 90 per cent of all Chinese domestic bonds are traded.
50
More than 50 central banks already hold some renminbi bonds among their foreign currency reserves
That created an opening for the several hundred institutions approved under the Qualified Foreign Institutional Investor (QFII) programme and a related scheme for offshore renminbi (RQFII) to diversify into bonds. The approvals come with quotas restricting the amount that can be invested, but Beijing does not disclose them.
Prior to the latest 32 approvals, 24 QFIIs, 86 RQFIIs, and an unknown number of foreign central banks and renminbi trade settlement banks had been previously approved.
A separate programme allows foreign central banks that have signed bilateral currency swap agreements with the PBoC, as well as overseas banks involved in cross-border renminbi trade settlement and clearing, to apply for access to the interbank bond market.
In recent days, the PBoC approved 32 new foreign investors under these two programmes, including HSBC, Morgan Stanley, Société Générale, BNP Paribas and ING Bank, according to statements published by Shanghai Clearing House.

In addition to hedging against capital outflows, the latest approvals may be an attempt to maintain the relevance of QFII following the launch of a rival programme that also allow foreign investors to buy mainland stocks.
The Shanghai-Hong Kong stock connect, launched in November, created a new channel for foreign investors to buy large-cap stocks traded in Shanghai, up to a quota of Rmb300bn ($48bn), with no preapproval required.
Indeed, even before the stock connect launched, investor demand for QFII appeared tepid. About half of the $150bn QFII quota and 60 per cent of the Rmb300bn RQFII quota remained unused by the end of April, according to figures from China’s foreign exchange regulator.
Additional reporting by Ma Nan in Shanghai

[specuvestor]

^^ Not true $ not enough. They are opening capital account because of internationalisation of RMB. Similarly I doubt they are opening A-share market so that foreigners can boost their market. But their basic principle as detailed in their manifesto last year is to have market discipline and pricing.

[CityFarmer]

^^ Not true $ not enough. They are opening capital account because of internationalisation of RMB. Similarly I doubt they are opening A-share market so that foreigners can boost their market. But their basic principle as detailed in their manifesto last year is to have market discipline and pricing.

I reckon, the issue is $ too much. One of the reasons for AIIB, is to making better use of excess China reserve.

(sharing a tiny add-on, on top of Mr. specuvestor's view)

[specuvestor]

Actually on a geopolitical point of view the AIIB is another nibble at USD hegemony. I won't be surprised in 5 years' time that AIIB will be lending primarily in RMB. If I can see that, I doubt US can't see that coming; which is why they will never support AIIB.

OT a bit on the political front, we see old US allies warming to AIIB and also China's policies. The logic is not difficult: If a 40 year old ally Mubarak can be tossed aside so easily, there is no security in US umbrella. Better to have a back-up plan.

I give Obama foreign policy a D minus on average. An F for the past 2 years. On domestic policies he has worked hard and tackled hard subjects, but his foreign policies are in shambles. This gave Russia & allies military manuevering space, and China economic space to flex their muscles.

[BlueKelah]

Actually on a geopolitical point of view the AIIB is another nibble at USD hegemony. I won't be surprised in 5 years' time that AIIB will be lending primarily in RMB. If I can see that, I doubt US can't see that coming; which is why they will never support AIIB.

OT a bit on the political front, we see old US allies warming to AIIB and also China's policies. The logic is not difficult: If a 40 year old ally Mubarak can be tossed aside so easily, there is no security in US umbrella. Better to have a back-up plan.

I give Obama foreign policy a D minus on average. An F for the past 2 years. On domestic policies he has worked hard and tackled hard subjects, but his foreign policies are in shambles. This gave Russia & allies military manuevering space, and China economic space to flex their muscles.

Hilary Clinton seems like a strong contender next election, like the angela merkel I think she will be a force to reckon with.

On a lighter mood and also O.T. look how patriotic angela is ROFL... checkout the handbag color.
[Image: Untitled-1_3292517b.jpg]

[greengiraffe]

http://www.cnbc.com/id/102665333

China cuts interest rates for third time since Nov as economy sputters
25 Mins Ago
Reuters
COMMENTSStart the Discussion
China's central bank cut its benchmark lending rate by 25 basis points to 5.1 percent on Sunday, its third reduction since November, as economic growth cools to levels not seen since the global financial crisis.

The People's Bank of China (PBOC) also reduced one-year benchmark deposit rates by 25 basis points to 2.25 percent, it said in a statement on its website, adding that the reductions would be effective on May 11.


Brent Lewin | Bloomberg | Getty Images
The central bank said the move would support the healthy development of the economy.
Economists had said it was not a matter of if, but when China eased policy again after economic growth in the first quarter cooled to 7 percent, the slowest pace since 2009.

Read MoreHank Paulson: Why China's economy is slowing

Initial indicators and industry surveys for April released over the last few weeks had pointed to a further loss of momentum heading into the second quarter.
"Currently, the pace of domestic economic restructuring is quickening and the fluctuation of external demand is relatively big. China's economy is still facing relatively big downward pressure," the central bank said.


Liquidity in the banking system is generally adequate and market interest rates are falling, providing a good window to open up the upper limit for deposit rates, it said.
The central bank has now cut interest rates and relaxed banks' reserve requirements five times in six months, and many economists expect more easing measures over the course of the year as the world's second-largest economy is weighed down by a weak property market and slackening growth in manufacturing and investment.

[BlueKelah]

China's Competitiveness Slides, Biting Into Exports

[ China’s exports unexpectedly declined in April and imports slumped, adding downward pressure on an economy grappling with overcapacity and waning competitiveness.

Overseas shipments fell 6.2 percent from a year earlier in yuan value, the customs administration said in Beijing on Friday. That compared with the median estimate for a 0.9 percent rise in a Bloomberg survey of analysts. Imports slid 16.1 percent -- the fourth straight double-digit decline -- leaving a trade surplus of 210.21 billion yuan ($33.9 billion).

Stronger demand from a recovering U.S. economy is being offset by sluggishness in Europe and a slide in shipments to Japan, compounding challenges for a nation facing rising labor costs and a strong currency. The central bank has cut benchmark interest rates and banks’ reserve ratios twice in the last six months to cushion an economic slowdown.]

[“The weakness globally in the first quarter wasn’t transitory and it’s going to persist,” said Tim Condon, head of Asia research in Singapore at ING Groep NV. “It’s time for another rate cut. We could see something almost immediately based on these numbers.”

Exporters in the Pearl River Delta manufacturing hub are facing persistent labor shortages and rising wages, according to a survey of manufacturing clients by Standard Chartered Plc. The nation’s 274 million migrant workers, the backbone of China’s labor-intensive manufacturing industry, are getting older and more expensive, with their average age increasing to 38.3 years in 2014 from 35.5 five years earlier, according to a quarterly survey from the National Bureau of Statistics.

China’s currency has climbed more than 10 percent in the past year in trade-weighted terms, eroding competitiveness.]

[greengiraffe]

http://www.ft.com/cms/s/2/767495a0-e99b-...ab7de.html

May 4, 2015 4:54 pm
China migration: At the turning point
Gabriel Wildau

A shrinking labour force from rural areas is driving huge economic change...

[specuvestor]

Could it be also because CPI is 1.5% hence real rates are at > 3.5%?

http://www.cnbc.com/id/102665333

China cuts interest rates for third time since Nov as economy sputters
25 Mins Ago
Reuters
COMMENTSStart the Discussion
China's central bank cut its benchmark lending rate by 25 basis points to 5.1 percent on Sunday, its third reduction since November, as economic growth cools to levels not seen since the global financial crisis.

The People's Bank of China (PBOC) also reduced one-year benchmark deposit rates by 25 basis points to 2.25 percent, it said in a statement on its website, adding that the reductions would be effective on May 11.


Brent Lewin | Bloomberg | Getty Images
The central bank said the move would support the healthy development of the economy.
Economists had said it was not a matter of if, but when China eased policy again after economic growth in the first quarter cooled to 7 percent, the slowest pace since 2009.

Read MoreHank Paulson: Why China's economy is slowing

Initial indicators and industry surveys for April released over the last few weeks had pointed to a further loss of momentum heading into the second quarter.
"Currently, the pace of domestic economic restructuring is quickening and the fluctuation of external demand is relatively big. China's economy is still facing relatively big downward pressure," the central bank said.


Liquidity in the banking system is generally adequate and market interest rates are falling, providing a good window to open up the upper limit for deposit rates, it said.
The central bank has now cut interest rates and relaxed banks' reserve requirements five times in six months, and many economists expect more easing measures over the course of the year as the world's second-largest economy is weighed down by a weak property market and slackening growth in manufacturing and investment.