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Track china's money supply and loan growth for risks by wwy yrj
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Track china's money supply and loan growth for risks by WWY YRJ
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| Article Posted: 09/08/2012 |
| Article Views: 76 |
| Articles Written: 1412 - MORE ARTICLES FROM THIS AUTHOR |
| Word Count: 464 |
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Track china's money supply and loan growth for risks |
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Business,Business News,Business Opportunities
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In this episode of China Money Podcast , hear what Mr. Ewen Cameron Watt has to say about China'sproperty sector. Mr. Cameron Watt is a managing director andportfolio manager at BlackRock, Inc, and below is an excerpt of hisviewpoints. On the Chinese property market, is it a bubble and is it bursting? What s happening in the real estate market in China isfascinating, where the government has deliberately engineered adecline in prices to deflate a bubble.
It s really an experimentbecause it s the first time in the fifteen years or so there hasbeen a private housing market in China. The big question for us isto what extent does it hurt activity levels and to what extent doesit impact the financial systems. On the outlook for the property sector and how will it impact otherparts of the economy? One of the big risks in China is that, investors in property investon the basis that the value will always rise. This is the firstreal decline in prices induced by the central government in the 15or so years of the private housing sector in China. No one knows what s going to happen for sure.
On the positiveside, more urbanization, household formation and all that supportsthe idea that there is an ongoing demand. That s certainly true.On the negative side, how will that demand manifest itself? I think that here the rate of return is important because there arevery few avenues for real returns for savers in China.They've gone into real estate, gold, wine and jade, becausethey think they get a real rate of return, which they don t getfor bank deposits. Bank deposits are 90 percent plus of the savingsvehicles in China. So it s a critical question how thepsychologies recover.
If I m honest, at this stage, I don t know. For global investors, what key indicators in China should theymonitor closely to better position themselves? One of the things we have watch closely is the rate of moneygrowth. There are some opportunities for the government to relaxrestrictions on banks to help the growth of monetary supply.Monetary supply has got to grow at nearly 15 percent to get 10 to11 percent nominal growth. We will give it an inflation rate offour percent, then you got a seven percent real growth that peoplehave come to believe is minimum growth for Chinese society andChinese stability. If you think about what investors would monitor, they shouldmonitor Chinese money supply, loan growth, and watch closely ifthese really decelerate; if that s the case, then the globalfinancial risk is rising, not just Chinese risk. I am Solar Energy Products writer, reports some information about laser safety curtains , elkay water cooler.
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