When someone shares with you something of value, you have an obligation to share it with others.
Wednesday 27 January 2010
Mobius Says China Lending Curbs May Benefit Economy
China’s lending slowdown may benefit the domestic economy by reducing risk and investors should still buy shares of the nation’s banks, investor Mark Mobius said.
Mobius Says China Lending Curbs May Benefit Economy
By Angus Whitley and Sarah McDonald 27 January 2010
(Bloomberg) -- China’s lending slowdown may benefit the domestic economy by reducing risk and investors should still buy shares of the nation’s banks, investor Mark Mobius said.
“I don’t see a slowdown in lending as a bad thing,” Mobius, who oversees about $34 billion in emerging markets funds as chairman of Templeton Asset Management Ltd., said in an interview at a conference in Sydney today. “It moderates risk to some degree because people don’t go overboard.”
Chinese banks have begun restricting new loans, responding to a push by regulators to contain credit after a surge in lending in the first half of this month, according to people familiar with the situation. That’s stoking concern a government clampdown on lending will slow growth in the world’s third- largest economy.
Recent gains by Chinese stocks had been overdone, while local banks have yet to tap fully potential demand for individual loans, Mobius said. The Shanghai Composite Index has dropped as much as 23 percent from a 14-month high set in August, after having doubled from its November 2008 low. The measure is currently 13 percent below last year’s peak.
“The market was due for a correction,” he said. “I don’t see the start of a huge bear market any time soon. As the Chinese get more into spending rather than saving, the banks will do very well. The consumer market really has just scratched the surface.”
‘Stabilized’ Loan Growth
Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, said today it will keep lending. The Beijing- based bank said in a statement that loan growth was “relatively fast” in the first half of January and has since “stabilized.”
Global equities tumbled last week after higher-than- expected economic growth in China fuelled concern that borrowing costs will rise to prevent the economy from overheating.
Gross domestic product expanded 10.7 percent while consumer prices rose a higher-than-estimated 1.9 percent in December from a year earlier, according to government data. China’s benchmark stock index fell yesterday to a three-month low. The measure added 0.2 percent to 3,025.60 as of 2:06 p.m. in Shanghai.
Every major stock index tracked globally by Bloomberg has fallen this year, amid proposed crackdowns by the U.S. on the banking industry and unwinding of government stimulus measures worldwide. The MSCI Emerging Markets Index, which jumped 75 percent in 2009, the most since annual records began in 1988, has dropped 5.3 percent this year.
Biggest Risks
The three biggest risks to China are the country’s reliance on demand for its exports, the supply of money, and potential losses by companies, in China and overseas, from derivatives, Mobius said today in Sydney.
“There is a tendency for them not to listen to their trade partners,” he said. “This is building up a lot of tension.” The Chinese will have to become more flexible, he said.
Mobius said Jan. 25 in Bangkok that he still doesn’t believe there’s a property bubble in China. He had said Jan. 7 he’s buying shares of Chinese developers because consumer demand will increase and government efforts won’t hurt economic growth.
Property prices in 70 cities across China climbed 7.8 percent in December, the fastest pace in 18 months, a government report showed this month. China’s property sales jumped 75.5 percent to 4.4 trillion yuan last year, led by the eastern cities of Zhejiang and Shanghai, the National Bureau of Statistics said in a Jan. 19 statement.
China’s property-market data may be masking the degree that speculation is driving prices in some of the larger cities, a World Bank economist said on Jan. 25. Only some areas in the Chinese economy are overheating, such as the Shanghai property market, Mobius said.
“There’s too much demand, not enough supply,” he said in a speech after the interview. “If you travel around the country, this is not the average situation.”
Mobius also said the price of commodities, including some precious metals, will climb. Metals prices fell today on concern that China’s measures to curb economic growth may hurt demand.
“Commodities are going to continue their upward trend,” he said. “I’m a big fan of palladium. It may even outpace platinum.”
2 comments:
Mobius Says China Lending Curbs May Benefit Economy
By Angus Whitley and Sarah McDonald
27 January 2010
(Bloomberg) -- China’s lending slowdown may benefit the domestic economy by reducing risk and investors should still buy shares of the nation’s banks, investor Mark Mobius said.
“I don’t see a slowdown in lending as a bad thing,” Mobius, who oversees about $34 billion in emerging markets funds as chairman of Templeton Asset Management Ltd., said in an interview at a conference in Sydney today. “It moderates risk to some degree because people don’t go overboard.”
Chinese banks have begun restricting new loans, responding to a push by regulators to contain credit after a surge in lending in the first half of this month, according to people familiar with the situation. That’s stoking concern a government clampdown on lending will slow growth in the world’s third- largest economy.
Recent gains by Chinese stocks had been overdone, while local banks have yet to tap fully potential demand for individual loans, Mobius said. The Shanghai Composite Index has dropped as much as 23 percent from a 14-month high set in August, after having doubled from its November 2008 low. The measure is currently 13 percent below last year’s peak.
“The market was due for a correction,” he said. “I don’t see the start of a huge bear market any time soon. As the Chinese get more into spending rather than saving, the banks will do very well. The consumer market really has just scratched the surface.”
‘Stabilized’ Loan Growth
Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, said today it will keep lending. The Beijing- based bank said in a statement that loan growth was “relatively fast” in the first half of January and has since “stabilized.”
Global equities tumbled last week after higher-than- expected economic growth in China fuelled concern that borrowing costs will rise to prevent the economy from overheating.
Gross domestic product expanded 10.7 percent while consumer prices rose a higher-than-estimated 1.9 percent in December from a year earlier, according to government data. China’s benchmark stock index fell yesterday to a three-month low. The measure added 0.2 percent to 3,025.60 as of 2:06 p.m. in Shanghai.
Every major stock index tracked globally by Bloomberg has fallen this year, amid proposed crackdowns by the U.S. on the banking industry and unwinding of government stimulus measures worldwide. The MSCI Emerging Markets Index, which jumped 75 percent in 2009, the most since annual records began in 1988, has dropped 5.3 percent this year.
Biggest Risks
The three biggest risks to China are the country’s reliance on demand for its exports, the supply of money, and potential losses by companies, in China and overseas, from derivatives, Mobius said today in Sydney.
“There is a tendency for them not to listen to their trade partners,” he said. “This is building up a lot of tension.” The Chinese will have to become more flexible, he said.
Mobius said Jan. 25 in Bangkok that he still doesn’t believe there’s a property bubble in China. He had said Jan. 7 he’s buying shares of Chinese developers because consumer demand will increase and government efforts won’t hurt economic growth.
Property prices in 70 cities across China climbed 7.8 percent in December, the fastest pace in 18 months, a government report showed this month. China’s property sales jumped 75.5 percent to 4.4 trillion yuan last year, led by the eastern cities of Zhejiang and Shanghai, the National Bureau of Statistics said in a Jan. 19 statement.
‘Too Much Demand’
China’s property-market data may be masking the degree that speculation is driving prices in some of the larger cities, a World Bank economist said on Jan. 25. Only some areas in the Chinese economy are overheating, such as the Shanghai property market, Mobius said.
“There’s too much demand, not enough supply,” he said in a speech after the interview. “If you travel around the country, this is not the average situation.”
Mobius also said the price of commodities, including some precious metals, will climb. Metals prices fell today on concern that China’s measures to curb economic growth may hurt demand.
“Commodities are going to continue their upward trend,” he said. “I’m a big fan of palladium. It may even outpace platinum.”
Post a Comment