China on Friday unveiled a series of measures to tighten property lending in its latest attempt to cool the country's overheating real estate market and curb mortgage lending risks.
The central bank and China Banking Regulatory Commission said in a joint statement that it will ban banks from lending to developers found to have been hoarding land. The changes were expected to take immediate effect. Downpayment requirement for second homes were raised to 40% from 30%, and requirements for commercial properties such as offices and shopping malls were increased to 50% from 40%, the statement said.
Mortgage rates for such purchases must be no less than 1.1 times benchmark rates, it said.
"Recently, property prices had gone up quite fast, which is obviously irrational," the statement said. "Once prices tumble, bad loans at commercial banks would surge."
The statement said it would still encourage people to buy their first homes. Downpayments for buying homes smaller than 90 square metres will remain unchanged at 20%, while for larger homes, the rate will be kept at 30%.
It is the second time since last year that the government has guided commercial banks to raise the downpayment requirements for home purchases.
Since 2005, China has raised interest rates, imposed new taxes and restricted lending to cool the robust property market out of concern that a possible collapse might endanger China's financial system and hurt its economy.
However, increases in property prices have accelerated this year, fueled by excess liquidity brought about by the country's widening trade surplus and hot money inflow driven by China's yuan appreciation.
Property prices in 70 major cities jumped 8.2% in August from a year earlier, with prices going up 20.8% in the southern boomtown of Shenzhen and 12.1% in Beijing.
Share prices of Chinese listed developers such as China Vanke have lost ground in the past few days on domestic reports that the government would soon take steps to curb property speculation.
Friday, September 28, 2007
Tuesday, September 25, 2007
Sunday, September 23, 2007
Dollar Crunching......??
The dollar fell to a record low against the euro and touched the weakest since 1976 versus the Canadian dollar on speculation the Federal Reserve will keep cutting U.S. interest rates.
The dollar posted the biggest weekly losses versus the euro since March as the Fed's half-percentage-point interest-rate cut on Sept. 18 dimmed the allure of U.S. assets. The Fed's trade- weighted dollar index sank to its lowest in 36 years. The dollar may extend its loss next week on reports forecast to show declines in home sales, durable goods and consumer confidence.
The dollar posted the biggest weekly losses versus the euro since March as the Fed's half-percentage-point interest-rate cut on Sept. 18 dimmed the allure of U.S. assets. The Fed's trade- weighted dollar index sank to its lowest in 36 years. The dollar may extend its loss next week on reports forecast to show declines in home sales, durable goods and consumer confidence.
The U.S. currency fell 1.6 percent this week to $1.4091 per euro and touched $1.4120 yesterday, the lowest since the euro's inception in January 1999. The dollar has lost 6.3 percent this year against the euro. It will drop to $1.45 per euro within two months, according to Gartman.
The New York Board of Trade's dollar index comparing the U.S. currency against six primary peers including the euro and yen, touched 78.398 yesterday, the lowest since September 1992. The Fed's major currency trade-weighted dollar index dropped to 74.78 on Sept. 20, the weakest since its inception in 1971.
The New York Board of Trade's dollar index comparing the U.S. currency against six primary peers including the euro and yen, touched 78.398 yesterday, the lowest since September 1992. The Fed's major currency trade-weighted dollar index dropped to 74.78 on Sept. 20, the weakest since its inception in 1971.
Inflation Concern.....
The benchmark 10-year Treasury note fell the most since March 2006 this week on concern the Federal Reserve's surprise half-point interest-rate cut may rekindle inflation.
Monday, September 10, 2007
After Credit Crunch... then Dollar Crunch...
Foreign Holders Flee Dollar
Interest-rate futures show traders are betting with 100 percent certainty the Fed will trim its benchmark by at least a quarter percentage point to 5 percent at its meeting Sept. 18.
Former Fed Chairman Alan Greenspan said on Sept. 6 that forces behind current market turmoil are ``identical'' to previous economic upheavals, including the 1987 stock-market crash and the aftermath of the 1998 Russian debt default and collapse of hedge fund Long-Term Capital Management LP.
The central bank cut its benchmark rate three times between September and November 1998. The dollar ended the year 13 percent weaker against the yen, and Treasuries fell for three straight quarters starting in the period ended Dec. 31, 1998.
Former Fed Chairman Alan Greenspan said on Sept. 6 that forces behind current market turmoil are ``identical'' to previous economic upheavals, including the 1987 stock-market crash and the aftermath of the 1998 Russian debt default and collapse of hedge fund Long-Term Capital Management LP.
The central bank cut its benchmark rate three times between September and November 1998. The dollar ended the year 13 percent weaker against the yen, and Treasuries fell for three straight quarters starting in the period ended Dec. 31, 1998.
Shifting Reserves
Asian central banks also reduced Treasuries last month in an effort to curb dollar gains against their currencies. Taiwan's central bank cut its currency reserves by $4.9 billion in August, mostly by selling U.S. bonds, George Chou, a deputy governor of Central Bank of the Republic of China (Taiwan), said in an interview.
Even before the flurry of sales, more nations were starting to shift foreign-exchange reserves away from U.S. government bonds.
Taiwan lawmakers are discussing whether to set up a fund to seek higher returns, Chou said. China is starting a fund to do the same for some of its almost $1.4 trillion in reserves. The fund raised $79 billion selling debt to the central bank last month.
China will likely, and appropriately, ``reduce its holdings of dollar assets to get higher returns,'' said Ha Jiming, chief economist in Beijing at China International Capital Corp., the nation's largest securities firm. Ha attends central bank Governor Zhou Xiaochuan's quarterly meeting with the nation's lenders.
The $50 billion Qatar Investment Authority said on Sept. 4 it is looking for options in Asia to counter a weak dollar.
Asian central banks also reduced Treasuries last month in an effort to curb dollar gains against their currencies. Taiwan's central bank cut its currency reserves by $4.9 billion in August, mostly by selling U.S. bonds, George Chou, a deputy governor of Central Bank of the Republic of China (Taiwan), said in an interview.
Even before the flurry of sales, more nations were starting to shift foreign-exchange reserves away from U.S. government bonds.
Taiwan lawmakers are discussing whether to set up a fund to seek higher returns, Chou said. China is starting a fund to do the same for some of its almost $1.4 trillion in reserves. The fund raised $79 billion selling debt to the central bank last month.
China will likely, and appropriately, ``reduce its holdings of dollar assets to get higher returns,'' said Ha Jiming, chief economist in Beijing at China International Capital Corp., the nation's largest securities firm. Ha attends central bank Governor Zhou Xiaochuan's quarterly meeting with the nation's lenders.
The $50 billion Qatar Investment Authority said on Sept. 4 it is looking for options in Asia to counter a weak dollar.
Wednesday, September 5, 2007
China Delays Buying Hong Kong Stocks
China will hold off from allowing local investors to buy Hong Kong shares directly until rules have been introduced to limit capital outflows, according to three officials at the country's banking regulator.
The State Council blocked the introduction of the share- purchasing program, announced by the State Administration of Foreign Exchange, after concerns were raised by the securities and banking regulators, said the officials, who asked for their names not to be published. China's shares have quadrupled in the past year and valuations are triple those in Hong Kong.
The State Council blocked the introduction of the share- purchasing program, announced by the State Administration of Foreign Exchange, after concerns were raised by the securities and banking regulators, said the officials, who asked for their names not to be published. China's shares have quadrupled in the past year and valuations are triple those in Hong Kong.
Hong Kong's Hang Seng Index has climbed 18 percent since SAFE's announcement and is today set for its first close above 24,000, while the Hang Seng China Enterprises Index, which tracks the so-called H shares of 41 mainland companies listed in the city, has jumped 31 percent. They're the world's best performers among 89 global benchmarks tracked by Bloomberg.
Hong Kong-listed shares are surging on speculation China's households will pour some of their 17 trillion yuan ($2.3 trillion) of savings into the city's equities once restrictions are relaxed.
The Hang Seng Index and the H-share index are valued at 16 times and 22 times reported earnings, respectively, compared with 52 times for China's CSI 300 Index. All 42 Chinese companies whose shares are listed in both Hong Kong and the mainland are cheaper to buy in Hong Kong, with 18 trading at less than half the price of their China-listed stocks.
Hong Kong-listed shares are surging on speculation China's households will pour some of their 17 trillion yuan ($2.3 trillion) of savings into the city's equities once restrictions are relaxed.
The Hang Seng Index and the H-share index are valued at 16 times and 22 times reported earnings, respectively, compared with 52 times for China's CSI 300 Index. All 42 Chinese companies whose shares are listed in both Hong Kong and the mainland are cheaper to buy in Hong Kong, with 18 trading at less than half the price of their China-listed stocks.
QDII Included
Restrictions on China's currency, the yuan, prevent individuals from investing overseas. The government is loosening controls as record trade surpluses drive up the foreign-exchange reserves and complicate efforts to cool the world's fastest- growing major economy.
China last year started allowing banks and brokerages to invest outside of the mainland under the so-called qualified domestic institutional investor, or QDII, program. These investments will also be subject to any new policy regulating capital outflows, according to the three officials at the banking regulator.
China's currency regulator said Aug. 20 that it will allow individuals holding accounts at Bank of China Ltd.'s branch in Tianjin city to buy Hong Kong stocks for the first time. It didn't specify an investment quota or say when the plan can start.
The regulator's lack of specifics didn't deter Li Chuansen. The former Shanghai Electric Group Co. employee, now 54, said he sold his Shanghai apartment for money to buy Hong Kong stocks
So suddenly all the bad news starting to disclose off.......
Sunday, September 2, 2007
Deja Vu All Over Again....?
The irony is that today, a decade later, the very same countries affected by crisis a decade ago, are the ones funding a growing U.S. current account deficit. Nicholas Carn, a partner at Odey Asset Management notes, "Countries that have built up large foreign currency reserves and run chronic surpluses, create a different set of issues".
Another irony – if another financial crisis were to emerge, the country most vulnerable would be the U.S.. Marc Chandler of Brown Brothers Harriman adds that if, "at some point if the Chinese pull out, the U.S. dollar would come under attack".
Why is September so bad? Part of the reason is a seasonal slowdown of money flowing into the market, so there's less new money to push up prices. In addition, Stovall says some mutual funds "have October as fiscal year-end, and may be selling losing positions from mid-September until mid-October."
Deja Vu All Over Again....?
Deja Vu All Over Again?
The irony is that today, a decade later, the very same countries affected by crisis a decade ago, are the ones funding a growing U.S. current account deficit. Nicholas Carn, a partner at Odey Asset Management notes, "Countries that have built up large foreign currency reserves and run chronic surpluses, create a different set of issues".
Another irony – if another financial crisis were to emerge, the country most vulnerable would be the U.S.. Marc Chandler of Brown Brothers Harriman adds that if, "at some point if the Chinese pull out, the U.S. dollar would come under attack".
The irony is that today, a decade later, the very same countries affected by crisis a decade ago, are the ones funding a growing U.S. current account deficit. Nicholas Carn, a partner at Odey Asset Management notes, "Countries that have built up large foreign currency reserves and run chronic surpluses, create a different set of issues".
Another irony – if another financial crisis were to emerge, the country most vulnerable would be the U.S.. Marc Chandler of Brown Brothers Harriman adds that if, "at some point if the Chinese pull out, the U.S. dollar would come under attack".
Subscribe to:
Posts (Atom)
