December 15, 2008

As Economy Slows China Speeds Financial Reforms



A noted Chinese economist forecasts economic growth declining in China to the third quarter of 2009.

Over the weekend China's all-powerful State Council released a series of reform measures to the country's financial system.

The headline grabber is an increase of M2 money supply of 17% next year but more important are some rule changes that could boost the Shanghai and ShenZhen stock markets:

New futures in steel and grain

A big push for corporate bonds particularly of companies in infrastructure building and supply. For example, insurance companies are encouraged to invest in such bonds and banks will be allowed to buy and sell bonds offfered on the exchanges.

Creation of Real Estate Investment Trusts (REIT) on a trial basis.

And further reform of the Yuan including trade settlement in Yuan with neighboring countries.


Morgan Stanley in Hong Kong believes the actions taken to date by Beijing will be enough to keep China out of recession but plenty of risks remain.

Labels: , , ,


Comments: Post a Comment

Subscribe to Post Comments [Atom]





<< Home

This page is powered by Blogger. Isn't yours?

Subscribe to Posts [Atom]