China cut interest rate again
The question is: what is going to do the China’s economy this year? Accelerating or slowing down respect to the previous year. People’s People’s Bank of China seems to be afraid from a hard landing, that’s why it cuts the interest rate by 0.25 % at the new record rate of 5.35 %. At the same time the bank lowers the deposits rate by 25 basis points. The biggest problem for China’s economy seems to be the level of the private debt, the non performing debts, the real estate bubble and the weaker world’s demand for China’s goods. Also the dollar appreciation doesn’t help the Chinese export for as long as the Yuan is connected to the dollar in a sort of currency-peg.
Markets around the world reacted positively to the news and have reached record highs. The Manufacturing Index for China released by HSBS was equally positive news for the markets. This index reached a level 50.7 much higher from what investors have expected.
Shanghai’s investors look to be not so worried about the slowing economy. Why is that, would be the question? It really seems that the American QE has affected positively the world entire.
At this point the investors are curious about what will happen to China’s equities markets when the monetary easing will stop?