China's Central Bank Hikes After Bullish GDP Report

After Thursday's report that China's Q2 GDP grew 11.9%, the fastest rate in twelve years, analysts were convinced the People's Bank of China [PBoC] would act quickly to raise interest rates. They were right, as the PBoC hiked late Friday by 0.27% to 6.84%. Despite an imminent hike, the Shanghai Composite gained 3.7% to recover the 4,000 level. The PBoC's one year target rate is its highest in eight years. This is the bank's third rate hike this year. It has also raised bank reserve requirements five times. Bank deposit rates will increase to 3.33%, but are still below the 4.4% annual inflation rate. A Hong Kong-based Goldman Sachs economist called the hike a "positive move to help contain overheating pressures," but said the "27 basis point hike is insufficient and we continue to expect one more hike in the remainder of the year." Separately, The Wall Street Journal reports T. Boone Pickens is traveling in China, evaluating local partners for a possible retail natural gas fueling station business venture, similar to the operations of Clean Energy Fuels Corp. in the U.S., which he co-founded. Pickens said switching to natural gas offers benefits over oil, such as being cheaper and helping reduce pollution.

Sources: Bloomberg, Reuters, Wall Street Journal I, II
Commentary: China's Q2 GDP Highest in 12 Years, Inflation Climbs • GDP Index Weighting For China Would Likely Backfire • As Long As China's Excess Money Supply Remains, Keep Buying
Stocks/ETFs to watch: Clean Energy Fuels Corp. (CLNE). Bond funds: iShares Lehman 1-3 YR Treasury Bond (SHY), iShares Lehman 7-10 YR Treasury Bond (IEF), iShares Lehman 20+ YR Treasury Bond (TLT). Currency funds: PowerShares DB G10 Currency Harvest Fund (DBV), Euro Currency Trust (FXE), CurrencyShares Japanese Yen Trust (FXY). China funds: Morgan Stanley China A (CAF), iShares Trust FTSE-Xinhua China 25 Index Fund (FXI), PowerShares Golden Dragon Halter USX China Portfolio (PGJ)

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Comments

[max petrisek:]

Boon Pickens is a smart oil man with a nose for profits. So off to China he goes on a clean natural gas hunt ! . Better late than never?

2007 Jul 20 07:03 AM

[Sufiy:]

US Dollar SUBPRIME CURRENCY: what all it means and how to Play IT
sufiy.blogspot.com/200...

2007 Jul 22 08:09 AM

[last man on...:]

Max,
Don't foget that he owns 10.5% in WestPort Innovations, (listed on the TSX :WPT) and, has had a silent hand in negotiators of the Cummings/Westport joint partnerships; that have been formed with two of China's largest diesel manufauctures. He is not a boardmember or a control freak as other billionaires we know....Icon. But, he may have a found one of the the bridge markets, in CNG/LNG Which; might be more long-term, than the even the big investment houses thought. CNG and LNG projects are popping up in many areas of the Midwest, and T.B.Pickens is said to be also, buying older underground cave stograge (old saltmines, natural limestone domes) I have just started to track U.S. storage capacity for CNG and LNG. Its part of a project for work; and relates well to my theisis for school. To all of the people that are worried about saftey, Don't! The fact is both forms of the gas LNG/CNG can be safely used in autos,trucks,busses and locomotives. Hence, the greener GE, is looking, in it's locomotive works.
Sincere regards,
MCN


On Jul 20 07:03 AM max petrisek wrote:

> Boon Pickens is a smart oil man with a nose for profits. So off to
> China he goes on a clean natural gas hunt ! . Better late than never?

2008 Aug 06 09:50 AM