24 Jun 2013
Flash: China leads Asia stocks lower - BTMU
FXstreet.com (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that Asian equities have declined further overnight with the Chinese equity market down by around 5.0% and falling back towards the lows from December of last year.
He adds that investor concerns over slowing growth in China are also evident by the price of copper which is testing lows from February 2011. Further, the Chinese authorities are trying to reassure investors that overall liquidity conditions in the banking system remain at a “reasonable level” with the recent spike in yields “due to many changing factors in the financial markets and also because of the mid-year point when the requirements for commercial banks in liquidity management have become higher”. He writes, “The overnight repurchase rate has declined further overnight to 6.47% after peaking at 12.85% on the 20th June although remains elevated. Tightening in liquidity conditions are encouraging investors to further downgrade their growth outlook for China with Moody’s commenting that it is negative for small to mid-sized banks.”
He adds that investor concerns over slowing growth in China are also evident by the price of copper which is testing lows from February 2011. Further, the Chinese authorities are trying to reassure investors that overall liquidity conditions in the banking system remain at a “reasonable level” with the recent spike in yields “due to many changing factors in the financial markets and also because of the mid-year point when the requirements for commercial banks in liquidity management have become higher”. He writes, “The overnight repurchase rate has declined further overnight to 6.47% after peaking at 12.85% on the 20th June although remains elevated. Tightening in liquidity conditions are encouraging investors to further downgrade their growth outlook for China with Moody’s commenting that it is negative for small to mid-sized banks.”