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Of dear, not again.....my bad Chinese.Ya should be 'horse2,Tiger2' and thank you shplayer and rickytan for the corrections. Lucky thing my 'Market reading' is not as bad as my Chinese!
Hopefully this "Sell In May and go away" thingy wouldn't happen.......................self-prophecy prevails maybe? Anyway if it does happen, The Market could come back even stronger, I think . Cheers!
Chinese saying "ma ma hu hu" ?
ten4one,
think it should be 'horse horse tiger tiger'.........
Sorry for the mis-translation as my Chinese is only 'tiger tiger horse horse' lah!
And so it is about increase in Deposits Reserve - Singapore did that many years ago and brought it down when our economy slowdown and we still have a healthy Stock Market!
Beijing could not afford the Stock Market to crash now as the Olympic Game is drawing closer. Tocurb with the excessive liquidity (last count was 33 trillion Yuan sitting in Chinese Banks) the Authority either raise exch rates or Deposits Reserve. Raising exchange rates will 'kill' exports and could have a dire impact on the economy and therefore the latter is choosen to slowly cool the economy and money supply. Cheers!
Deposit Reserve Ratio Raised Again to Curb Excess Liquidity
The required reserve ratio for financial institutions engaged in deposit business will be raised by 0.5 percentage points as of May 15 to 11 percent, the People's Bank of China said Sunday.
This is the fourth time the central bank has raised the deposit reserve ratio this year and the seventh time since last year amid other efforts to rein in excessive liquidity and cool off booming economic growth.
The central bank raised the bank deposit reserve ratio by the same margin of 0.5 percentage points in June, August and November last year and January, February and on April 16 this year.
The further rise in reserve requirement ratio came after
The consumer price index of 3.3 percent in March, the highest in more than two years, was well beyond the comfortable target of three percent set by the Chinese government for the year.
The move also showed the central bank's determination to continue to tighten liquidity management, a major problem threatening
Li Xiaochao, spokesman of the National Bureau of Statistics, said recently that
Li acknowledged that the Chinese government would take more small steps rather than drastic cooling measures to ensure a stable and fast economic growth.
(Xinhua News Agency April 29, 2007)
Well with this report, I think its healthy, chinese govt does not want to create a big crash, even if the mkt crashes, fundalmentally the economy is still growing, guess where would be a safe haven. Could SGX benefit from the inflow of smart money? Just a thought
With the rate increase anouncement on 29 April 2007, even though is not the interest rate from the bank loan.
But is an indication of the government going to take action soon for the overheating market before it becomes a big bubbles.
So May in china there are going to have a week long holiday, after that what will happen.
After a week of happy enjoyable holiday, what will happen......
Who noes but could it be a nightmare for the trader.....RISK is VERY HIGH.
In short, my view is Monday is the only opportunity to RUN before get trap in between.
GOOD LUCK to those who still think that is impossible that things will go worst......
Yes, China is raising its Reserve Ratio requirement for Chinese Banks, not interest rates. This would, in theory, lead to a rise in the Money Supply and Demand equilibrium that essentially is an alternative to raising interest rates to curb the overheating of the economy. Other measures such as Open Market Operations are also hypothetically supposed to achieve similar effect.
Hope this makes sense
It's not raising of interest rate. It's actually raising the banks' about of money in reserves by 0.5%, from 10.5% to 11%. This is the 4th increase in reserve requirement this year With the increase in reserve requirements, there probably will not be interest rate increase in the short term
Hi ruanlai, to be fair to other Forumers who can't read Chinese, it'd be good to post your comments in English.
Simplified Translation : "The People's Bank Of China will raise interest rate for all deposits in RMB by 0.5 pct pt. on the 15.05.07."
IMO, the int rate hike is calculated and designed to curb consumers' spendings and not an upward pressure on interest rates or the Yuan. The Stock Market will not crash 'cos it is supported by earning recovery and not valuation multiple expansion. As I've said before, a wild swing is definitely coming and no one is able to call a date or predict the length of the swing. It could be similar to the one we saw in late Feb and early Mar. This time the swing could be much wilder and last longer......who knows! Cheers!
Here comes the phrase 1......MAY DAY! MAY DAY!
中国人民银行２９日宣布，决定从２００７年５月１５日起上调存款类金融机构人民币存款准备金率０.５个百分点。
Market correction is defintely in the card as the Bull can't move up in a straight line and this Bull is overdue for one. I do expect a big swing this May. Not for long, Investors will be back to support the Bull as liquidity is flowing strongly and there is no shortage in Asia at the moment. Secondly, the Asian economy is fundamendally strong and Singapore is no exception (except the change in engines drivers).
Interest rates maybe a concern, but as long as inflation is in check, there shouldn't be a problem for the Market. The only problem is how long can this Bull Run last? I hope I know and not be caught in the stampede when it happens and at the same time, I don't want to miss the boat. Cheers!!!!!!!!!!
Thu Apr 19, 2007 1:09 AM ET
By Charlie Zhu
SHANGHAI, April 19 (Reuters) - China's A-share market is overheated, as evidenced by a recent relentless surge in small-cap stocks, but any pull-back is unlikely to reverse the long-term upward trend of the market, fund managers said.
The benchmark Shanghai composite index's <.SSEC> 32 percent gain this year was largely fuelled by a frenzy of speculative buying of shares in small companies with poor earnings records but bolstered by rumours that their assets would be restructured.
The A shares of 753 listed companies, or more than half of all stocks floated on the exchanges in Shanghai and Shenzhen, have doubled this year, the Shanghai Securities News said in a report on Wednesday.
The surge is reminiscent of the late 1990s, when nearly all China-listed third-tier stocks went through the roof on speculation of asset restructuring, before falling back sharply.
"The market is obviously overheated. Investors are merely chasing rumours these days," Lu Jun, chief investment officer of China International Fund Management, JPMorgan's <JPM.N> fund management joint venture in Shanghai, told Reuters.
"I would only buy stocks that are backed by solid fundamentals," said Lu, a well-known fund manager in China.
Lu and other fund managers said many of the country's blue-chips were still worth buying, anchored by China's rapid economic growth and a series of structural reforms that have improved corporate governance.
The first-quarter results of 96 Chinese mutual funds showed they had cut their stock positions to 80.2 percent, from 83.36 percent in the fourth quarter, with financial and property bearing the brunt of selling, state media reported.
But fund managers said that did not mean they were souring on those blue-chips. They were forced to sell down those stocks, which are more liquid, to meet redemptions from retail investors, who raised money to buy new funds.
SHARP CORRECTION
"Third-liners will undergo a sharp correction this year because the bubble is getting too big. We still see long-term value in the banking, property and steel sectors," said Zhu Ping, chief investment officer of GF Fund Management Co.
The Shanghai composite index fell 2.39 percent on Thursday morning on concern that March economic data, due to be released after the market's close, might show an overheating economy and prompt the central bank to hike interest rates.
Third-liners were among the morning's biggest losers, although heavily weighted blue-chips also tumbled, with oil refiner Sinopec <600028.SS> losing 4.21 percent.
Fund managers said the massive rally among small-cap stocks this year was mainly propelled by retail investors, who are swarming into the stock market following a 130 percent gain in the Shanghai composite index in 2006.
Chinese investors opened 1.14 million stock accounts in the past five trading days, state media said, surpassing the number opened in the whole of 2005.
Retail investors have also been piling into the mutual fund sector, snapping up newly launched products, fund managers said.
Two Chinese mutual fund companies raised a combined 18 billion yuan ($2.33 billion) in a single day from the launch of two equity funds this week.
Phone banking systems also crashed at several Shanghai banks on Monday due to heavy demand from users who scrambled to transfer deposits to their stock accounts, the Shanghai Securities News reported.
China International Fund Management said last week it had received nearly 90 billion yuan in subscriptions to its new equities fund in a single day -- more than 10 times its original sales target.
"I think the overall stock market can still be propped up by ample liquidity, although too much risk has been accumulated in small stocks," said Pan Jiang, chief equity investment officer at fund house Wanjia Asset Management Co.
dont think so, then again what do i know....hehe
so better get out tis coming monday?, then put $$$ in bank?comments/opinions welcome.