Tuesday, 11 May 2010 07:43

My China Ruminations Have Come to Pass As the Country Enters a Bear Market

From Bloomberg: China Inflation Accelerates as Loans Surge, Property Prices Rise by Record

May 11 (Bloomberg) -- China’s inflation accelerated, bank lending exceeded estimates and property prices jumped by a record, increasing pressure on the government to raise interest rates and let the currency appreciate.

Consumer prices rose 2.8 percent in April from a year earlier, the fastest pace in 18 months, and property prices jumped 12.8 percent, the statistics bureau said in statements today. New lending of 774 billion yuan ($113 billion), announced by the central bank, was more than any of 24 economists forecast.

Asian stocks fell, with the local benchmark index entering into a bear market, and oil and copper slumped on concern the government will move to cool the fastest-growing major economy. China should focus on preventing excessive increases in asset prices and liquidity after Europe’s almost $1 trillion loan package reduced the risk of another global slump, central bank adviser Li Daokui said yesterday.

“Price pressures have been building throughout the economy, strengthening the case for higher interest rates and a stronger yuan,” said Brian Jackson, a Hong Kong-based strategist at Royal Bank of Canada. “China is at risk of overheating, with spot fires breaking out in various parts of the economy.”

Subscribers interested in this sector should have their positions intact by now. Those that do not and are interested in my opinion should know that I believe China has a way to go. The equity market drop signals an official bear market. Non-subscribers should reference:

Last modified on Tuesday, 11 May 2010 07:44

1 comment

  • Comment Link schan Tuesday, 11 May 2010 10:59 posted by schan

    I talked a friend today who bought EWA puts. He mentioned that EWA and FXI both fell below their 200 EMA. They are officially in freefall.

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