Hello Pezz, As you remember, I sold the vast majority of my China/HK shares Message 19221008 in anticipation of the return of SARS.
I was a few days too early, as the shares sold mostly gained another 5% or so, and have given most of it back today, in one day.
Now, the serious selling by others should start, because nytimes.com "Central bank in China raises reserve requirement", meaning ...
Key points:
1) PBOC demonstrates its willingness to tighten by taking the draconian step of raising reserve requirement (RR) from 6% to 7%, thereby removing RMB150bn from the financial system.
2) This is on top of the policy of using administrative policy to limit total loan increase to only RMB2.8 trillion this year. This might result in a decline of 4.3% of loan growth for the rest of the year.
3) Though I do not expect PBOC to change its benchmark deposit and lending rate, tightening money supply would inevitably lead to higher inter-bank rate and bond yield. Of course, this is just what central bank desire.
4) I believe that the banking sector and the brokerage industry will feel the heat from PBOC tightening. Cyclical industries closely related to fixed asset investment will be hard hit. The government has also warned of blatant overheating in property, auto and basic material such as aluminum, steel, cement and glass.
5) Thus, take profit, until the screaming in the death-match arena dulls down to a whimper, and then wade back in through the muck and gore, and polish off the survivors.
Chugs, Jay |
