The Year of the Ox is here; but the markets in Asia are not having a bull run. Actually, they are contracting. And contracting they will continue. Just read thru some local economic news from within China: Shanghai and Beijing real estate market will continue to slump. Many are holding cash on the side line waiting for the housing prices to fall further. Along the coast, expect more Hong Kong established factories to close. Last estimate will be at about 10,000 factories affecting about 1 million migrant and local workers. Yikes.
Another note: A very interesting point raised by the Chinese Premier Wen Jia Bao in England. The incentive programs in China is geared for tax cuts and stimulating purchasing. The Chinese gov't has not been taking huge amount of money to compensate the big bank losses like the Western countries are, in particular the US. That is true to a point. The Commie head had taken a lot of money to assume losses in Citi (Hong Kong) on the Australian $ accumulator bet. Then there was the China Eastern oil hedging that lost 67 billion RMB. Still, majority of the money amount is tax cut vs the "printing" of money to fill the big holes in the bank losses. At this rate, I don't see the Asian big brother will be in any hurry to purchase any more of the Western big brother treasuries or bonds. Hands burned once, will be more prudent.
No comments:
Post a Comment