Capital Markets

Fall in China forex reserves adds pressure for liquidity easing

Data from the People's Bank of China (PBOC) published today shows a $20.6bn, or 0.6 %, fall in China's official foreign exchange reserves which slipped to $3.18tn in 4Q11. A fall in reserves in both November and December represents the first consecutive monthly fall since the first quarter of 2009. We think the figures show continued outflows of "hot money" and raise pressures for a further easing in domestic liquidity.

Default risks goad Beijing into loosening curbs

During 2012 authorities are set to relax restrictions they have imposed on bank support for local government financing vehicles (LGFVs) and on the property market because the rising risk of defaults among LGFV and trust companies will oblige Beijing into a softer stance. Some aspects of this predicted relaxation may be announced and some, such as a few recent initiatives, may be communicated through largely confidential “window guidance” from regulators to financial institutions.

Kim Jong Il death rattles markets

Markets closed down in Asia in response to the death of the North Korean leader Kim Jong Il and concerns over the transition of power in China's northerly neighbor. The benchmark Shanghai Composite Index dropped 0.3%, or 6.61 points, to close at 2,218.24 while the Shenzhen Component Index slid 0.31%, or 27.86 points, to finish at 9,054.08. The dips mirrored similar slides in the Korea Composite Stock Price Index (KOSPI), which slid 3.43%, and the Nikkei Stock Average, down 1.26%.

A hot money exodus

Chinese hot money is rushing overseas, raising a host of implications for the renminbi, domestic monetary policy and wealth managers around the world.

A turning point for renminbi internationalisation?

Investors who prefer to take a longer-term view on the renminbi can find comfort in knowing that Beijing is still eager to internationalise its currency.

Regulators toughen up on ChiNext

Alleged insider trading and speculation on junk stocks have dampened sentiment, forcing regulators to launch a delisting mechanism for the growth enterprise board.

China buys bank shares to bolster confidence

Central Huijin Investment, an arm of China's $400bn sovereign wealth fund, said on Monday that it had bought shares in the "big four" state banks. We think the move was aimed at bolstering confidence both in the banks, which suffered an Rmb 420bn outflow of deposits in the first half of September, and in the wider domestic stock market.

East Money – hit by a falling equity market

East Money’s reliance on supplying financial information to equity investors makes it vulnerable to market swings – and this year the swing has been downward.

Alarm bells ring over property-related Trust products

Trust company business has ballooned this year, but the boom obscures rising levels of risk within the industry.

Financial reform hit as "China sub-prime" concerns grow

Concerns over financial fragility, mixed with a conservative political atmosphere ahead of the 2012 political succession is hitting the pace of financial reform.

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12 Jan 2012

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