China: less bang for its credit buck
In China, it’s often the case that the numbers themselves are a source of confusion, if not outright disbelief. But sometimes the numbers also speak for themselves. And one in particular is telling: credit intensity.
This measures the amount of credit needed to generate growth, and it has risen rapidly in the past six months to near its highest level. In other words, when it comes to GDP, China is getting less bang from it’s credit buck. Continue reading »
China: investment still comes first
China’s economy has started 2013 with an unexpected slowdown in manufacturing growth and a surprise surge in inflation, according to data published over the weekend.
But the real news in the numbers is the persistent strength of credit-fuelled investment. Despite all the effort put into rebalancing the economy in favour of domestic consumption, it’s still the investment engine that’s driving the economy. Continue reading »
US and China credit worries hit Asia
With concerns about the US Federal Reserve possibly cutting its stimulus programme hitting American markets, it was little surprise to see Asian risk assets getting a battering on Thursday.
But the impact was compounded by unexpected moves from the Chinese authorities to curb the property market and reduce to reduce liquidity. As a result the MSCI Asia ex-Japan index slumped by 1.8 per cent, with China leading the way and Shanghai closing down 3 per cent. Continue reading »
China banks wary of steel traders
China’s banks are about to start installing CCTV cameras in steel traders’ warehouses to make sure those traders are using their bank loans to actually trade steel – such is the erosion of trust in that sector.
Banks realised at the end of last summer that things were not going so well for their exposures to the traders, perhaps because, as it turned out, many smaller and mid-sized operations had been using some of their bank loans for purposes other than buying and stocking steel products. Continue reading »
Emerging markets riding to the rescue?
Will emerging markets ride to the rescue of the developed world? A new report from Ernst & Young suggests they will.
The report, Rapid-Growth Markets Forecast, Summer 2012, says a re-balancing of emerging economies towards domestic consumption, led by China, should reduce their dependence on western export markets while providing a new engine of growth for the world economy – even to the extent of “stabilizing financial markets and economic systems across the world”. Continue reading »
China lending: still weak
The weakest loan growth figures since 2005 may prompt further easing by China’s central bank, according to analysts, if the country is to avoid a significant slowdown in demand.
Loan and deposit data released over the weekend by the People’s Bank of China showed deposits recovering dramatically in February from the record Rmb800bn withdrawn in January, but also showed loan growth that came in below expectations for the second month in a row. Continue reading »
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Stefan Wagstyl
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Pan Kwan Yuk
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