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PBOC cuts reserve ratios for certain banks

  • China's central bank on June 16 will cut the reserve ratio by 50 basis points for some banks focusing on lending to the rural sector and smaller companies, with the move also applying to financial leasing and auto financing firms.
  • The action follows a promise two months ago by the State Council to take action to boost economic growth.
  • In other news, land sales plunged in May, with 1,767 deals over 300 surveyed cities down 45% from a year ago and 19% from April. May is traditionally a big month for sales, but developers, says real estate website Soufun, are in "wait-and-see" mode.
  • Property developer stocks (TAO) slipped in Hong Kong (EWH) overnight, including Poly Property off 7.7%, Shimao Property down 4.3%, and Fantasia Holdings off 2.3%.
  • ETFs: FXI, PGJ, GXC, FXP, YINN, YANG, MCHI, XPP, YAO, YXI, CHXF, FCA, CN
Comments (1)
  • Mike Holt
    , contributor
    Comments (1464) | Send Message
     
    Will this result in credit flowing to small businesses and individuals without strong connecttions to the CCP? Or will any loosening of credit without fundamental reforms to the Chinese economy and banking system merely result in more credit flowing to sectors plagued by overcapacity but controlled by the state and/or those with powerful positions within the CCP?

     

    The reserve ratio cut will affect about two-thirds of the city chartered banks, after a similar reduction appied to county banks effective April 25? What was the affect of the reduction in reserve requirements for the county banks in April. It may be too early to tell, but that could provide some indication of what might be expected from he reduction in the reserve requirements for the city chartered banks.

     

    Reforms that allowed private banks to compete with state-owned / party-controlled banks to make loans whose credit-worthiness wasn't primarily impacted by the extent to which they were assumed to be backed by the government, i.e., the CCP, would go a longer way to rationalizing China's economy and their undeveloped banking system that the CCP uses as a conduit for control over the Commanding Heights of the Chinese economy.
    9 Jun, 08:47 AM Reply Like
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