SG Talk

Last Friday investors waited eagerly for PBOC to cut interest rates but it never happened.

The Fed raising rates has limited China's options to stimulate it's economy due to capital flight resulting from interest rate difference.

https://asiatimes.com/2022/02/china-brac...-us-rates/

In addition to Covid and housing trouble....US interest hikes pose another challenge for china.

https://www.cnbc.com/2016/12/14/higher-i...china.html

Just extend the loan repayment period can temporary resolve the problem. No need to cut rate.
They learned from Sg lah….

Now I am waiting for (“volcano eruption”)in US.
Inviting inflation monster is a suicidal move.

Chinese policy makers recognise this problem.

Listen to Xi's speech carefully in which he urge developed countries policy makers to consider developing economies. This is similar to the Greenspan hikes which were the trigger of Asian crisis.

I don't worry about the delisting risks ...or regulations etc
 However interest rate effects at a time when China economy is weakening will mean potential for large downside is higher.

Investors have to be prepared.

China is now facing the reverse of this

Ji Pei, China Huat Liao!!!

HUAT AH !!!!!

(21-04-2022, 08:53 AM)revealer Wrote: [ -> ]China is now facing the reverse of this

The reverse is 
1  Global investors borrow inUS$ cheaply. 
2. They buy high yield.binds in China.
3. US rate rise
4. They have to.dump China bonds and flow back the money to pay off US$ debts.
5. This case the yield to shoot up for.china.corporate bonds.

6. China economy is weakening and these companies have difficulty paying the debts and have to  borrow T higher a d higher cost.

Cutting rates in China will accelerate the problem as the gap will trigger outflows

This issue is a lot more serious. I sort of miss it due to ther headline news of delisting regulation war etc.

This is same pattern as Asian crisis. Only difference is China has big reserves and currency control in place

But it is still serious. Key an eye on this

Many China bulls will be wrong at least until this is resolved