Skip to main content

Two Steps Back, One Step Forward

The People's Bank of China said on its Web site late Friday that it will raise the benchmark lending and deposit rates by 18 basis points and 27 basis points respectively. This will be in addition to another 50-basis-point rise in the reserve requirement for banks. The PBOC also announced the widening of the yuan trading band from 0.3 percent to 0.5 percent against the US dollar.

Now it appears the PBOC is getting serious trying to halt the China stockmarkets. However, the widening of the appreciation band for the yuan will actually provide good support. PBOC had to do something with the yuan as there is a big visit to Washington this week by some Chinese big wigs. This is to provide some solace for Paulson to pacify the threats of American lawmakers. The rumblings are that there will be more tough questions asked during the visit. Unfortunately by allowing the yuan to gain more ground, it stokes the stockmarkets in China even more (currency gains in outlook).

Finally PBOC is doin something with its deposit rates, it is still too low vis-a-vis the lending rates. Deposit rates need to go up even more aggressively so that it can present as aviable counterbalance to soak up speculative funds.

Initially we may see a drop in the China markets but it is difficult to envision a dramatic correction as the yuan issue will perk up bottom fishers.


ahh, this arial font is so much easier on the eyes than the arty one. thank you
rask3 said…
However you slice it, dice it or cut it, overvaluation of stocks is still overvalution, after taking forward PE's and future cash flows into consideration.

Which implies that once the stock market has sucked in all the suckers, and there is practically no one left to be slaughtered, there will be a big crunch. The supply of fools cannot be endless.

Tauke Saham said…
Godday Sir,

Ur blog is very interesting. Permission to link from mine.

Salvatore_Dali said…

have visited yr blog too, its very good, sure no prob, will do same here
stocktube said…
when everyone thinks the market is unstoppable, that's when you should be careful ... but your concern will always be drowned by the huge spectators who like to watch the show to continue non-stop ... just my opinion ...

Popular posts from this blog

My Master, A National Treasure

REPOST:  Its been more than two years since I posted on my sifu. This is probably the most significant posting I had done thus far that does not involve business or politics. My circle of close friends and business colleagues have benefited significantly from his treatment.

My Master, Dr. Law Chin Han (from my iPhone)

Where shall I start? OK, just based on real life experiences of those who are close to me. The entire Tong family (Bukit Kiara Properties) absolutely swear that he is the master of masters when it comes to acupuncture (and dentistry as well). To me, you can probably find many great dentists, but to find a real Master in acupuncture, thats a whole different ballgame.

I am not big aficionado of Chinese medicine or acupuncture initially. I guess you have to go through the whole shebang to appreciate the real life changing effects from a master.

My business partner and very close friend went to him after 15 years of persistent gout problem, he will get his heavy attacks at least…

PUC - An Assessment

PUC has tried to reinvent itself following the untimely passing of its founder last year. His younger brother, who was highly successful in his own right, was running Pictureworks in a number of countries in Asia.

The Shares Price Rise & Possible Catalysts

Share price has broken its all time high comfortably. The rise has been steady and not at all volatile, accompanied by steady volume, which would indicate longer term investors and some funds already accumulating nd not selling back to the market.

Potential Catalyst #1

The just launched Presto app. Tried it and went to the briefing. Its a game changer for PUC for sure. They have already indicated that the e-wallet will be launched only in 1Q2018. Now what is Presto, why Presto. Its very much like Lazada or eBay or Alibaba. Lazada is a platform for retailers to sell, full stop. eBay is more for the personal one man operations. Alibaba is more for wholesalers and distributors.

Presto links retailers/f&b/services originators with en…

How Long Will The Bull Lasts For Malaysia

Are we in a bull run? Of course we are. Not to labour the point but I highlighted the start of the bull run back in January this year... and got a lot of naysayers but never mind:

p/s: needless to say, this is Jing Tian ... beautiful face and a certain kind of freshness in her looks and acting career thus far

I would like to extend my prediction that the bull run for Bursa stocks should continue to run well till the end of the year. What we are seeing for the past 3 weeks was a general lull where volume suddenly shrunk but the general trend is still intact. My reasons for saying so:

a) the overall equity markets globally will be supported by a benign recovery complemented by a timid approach to raising rates by most central banks

b) thanks to a drastic bear run for most commodities, and to a lesser extent some oil & gas players, the undertone for "cost of materials" have been weak and has pr…