As US Federal Reserve chairman Ben Bernanke suggested further monetary
easing was on the way, economists warned that this could lead to higher
inflation and dilute the value of China’s foreign currency assets.
The warning came as China’s
monetary authorities are taking steps to prevent an asset bubble as economic
growth picks up speed.
Bernanke told the Senate Banking
Committee on Tuesday that the Fed initiative in bond purchases is creating a
stronger recovery at home and “mutually beneficial” results for other
countries.
The U.S. economy grew slightly in
the fourth quarter, reversing an earlier estimate showing contraction, and a
drop in new claims for unemployment benefits last week added to a string of
data that suggests the economy improved early this year.
Still, an even higher revision to
GDP data was expected, and the jobless claims extended a trend baked into stock
prices.
The low volume shows a lack of
conviction from new buyers.
The efficiency of China’s economy
is slipping, with money flowing much slower between different sectors than in
the past, according to analysts.
They said this is despite the
fact that the nation has a considerable amount of social financing — an
approach to managing money that delivers a social dividend and an economic
return.
Liu Yuhui, director of the
financial lab at the Chinese Academy of Social Sciences, a government think
tank, said although financing activities in the country appear to be rampant,
most of the newly borrowed money is used to repay debts instead of forming
revenue among companies.
“We can see that the ratio of
money to gross domestic product has been increasing, which means the economy
needs increasing capital to promote than previously.”
Last year, social financing,
which included bank and non-bank loans, bond issuance and stock sales, set a
record high of nearly 16 trillion yuan ($2.54 trillion). The ratio of M2, a
broad measure of money supply, against GDP stood at a record high of 188
percent at the end of last year.
Yesterday in Asia
Tokyo climbed 2.71
percent, or 305.39 points, to 11,559.36 as the yen sank on confirmation that
Japan’s government had put forward Haruhiko Kuroda to take over at the Bank of
Japan.
Kuroda, the current Asian
Development Bank chief, is known as an advocate of a looser monetary policy to
overcome slow growth, in line with the views of Prime Minister Shinzo Abe.
The dollar bought 92.36 yen,
compared with 92.16 yen in New York late Wednesday.
Sydney added 1.34 percent,
or 67.5 points, to end at 5,104.1 and Seoul rose 1.12 percent, or 22.45 points,
to 2,026.49.
Hong Kong shares
advanced 1.96 percent, or 443.26 points, to 23,020.27 and Shanghai jumped 2.26
percent, or 52.37 points, to 2,365.59.
Wellington jumped 1.02
percent, or 43.69 points, to 4,320.01.
Air New Zealand added 4.1 percent
to NZ$1.40 and Auckland Airport was up 2.2 percent at NZ$2.83 while Telecom
rose 2.1 percent to NZ$2.42.
Manila closed 1.59 percent
higher, adding 105.18 points to 6,721.45.
SM Investments rose 3.37 percent
to 1,044 pesos while Bloomberry Resorts gained 2.64 percent to 14.78 pesos.
Singapore rose 0.27
percent, or 8.83 points, to close at 3,269.95.
United Overseas Bank fell 0.63
percent to Sg$19.08 while Jardine Cycle and Carriage gained 0.86 percent to
Sg$51.60.
Bangkok added 1.55 percent,
or 23.53 points, to 1,541.58.
Telecoms company True Corporation
jumped 3.88 percent to 6.70 baht, while supermarket operator Siam Makro rose
6.61 percent to 484 baht.
Mumbai slid 1.52 percent,
or 290.87 points, to 18,861.54 points.
Top commercial bank State Bank of
India fell 5.8 percent to 2,085.4 while mobile phone firm Reliance
Communications fell 11.8 percent to 61.1 rupees.
Jakarta ended up 1.68
percent, or 79.37 points, at 4,795.79.
Telekomunikasi Indonesia rose
5.91 percent to 10,750 rupiah, miner Aneka Tambang climbed 0.78 percent to
1,290 rupiah, and paper maker Pabrik Kertas Tjiwi Kimia dropped 1.12 percent to
2,200 rupiah.
Kuala Lumpur gained 0.83
percent, or 13.49 points, to close at 1,624.14.
British American Tobacco soared
4.7 percent to 61.00 ringgit while UMW Holdings rose 4.1 percent to end at
12.80 ringgit. Bumi Armada slipped 0.3 percent to 3.79 ringgit.
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