{"id":1488735,"date":"2024-09-09T02:13:51","date_gmt":"2024-09-09T06:13:51","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1488735"},"modified":"2024-09-09T02:13:51","modified_gmt":"2024-09-09T06:13:51","slug":"china-faces-worst-deflationary-streak-since-1999","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/china-faces-worst-deflationary-streak-since-1999\/1488735\/","title":{"rendered":"China Faces Worst Deflationary Streak Since 1999"},"content":{"rendered":"

China Faces Worst Deflationary Streak Since 1999<\/span><\/p>\n

\n

By John Liu and Zheng Wu, Bloomberg markets live reporters and strategist<\/em><\/p>\n

Three things we learned last week:<\/em><\/p>\n

1. China\u2019s former central bank chief made a rare admission that the nation should tackle deflation.\u00a0<\/strong>The economy faces its worst deflationary streak since 1999, putting pressure on corporate profits, wages and asset prices.<\/p>\n

China should focus on\u00a0fighting\u00a0deflationary pressure now, former Governor\u00a0Yi Gang\u00a0said in Shanghai on Friday<\/strong>. The unambiguous message contrasts with the People\u2019s Bank of China\u2019s restrained efforts in monetary easing so far. The PBOC has repeatedly signaled it would\u00a0refrain\u00a0from any \u201cdrastic easing.\u201d<\/p>\n

<\/a><\/p>\n

Competing priorities have hampered China\u2019s fight against deflation up to now. The PBOC has been reluctant to cut interest rates aggressively because of concerns about currency weakness and banks\u2019 profit\u00a0margins.<\/p>\n

Illustrating that tension, the head of the PBOC\u2019s monetary policy department\u00a0<\/a>cautioned\u00a0on Thursday about constraints on decreasing deposit and lending rates further. The central bank may be inclined to reduce banks\u2019 reserve requirements before acting again to cut its policy rate.<\/strong><\/p>\n

* * *<\/p>\n

2. Bearish sentiment intensified in financial markets as investors saw no near-term escape from China\u2019s economic malaise.<\/strong>\u00a0Although the yuan got a boost from anticipation of a rate cut by the Federal Reserve later in the month, risk-off sentiment remained dominant in equity and bond markets.<\/p>\n

The benchmark CSI 300\u00a0index\u00a0declined to the lowest level since early February, when China unexpectedly\u00a0replaced\u00a0the chief of its stock-market watchdog amid a market selloff.<\/strong><\/p>\n

JPMorgan Chase last week\u00a0abandoned\u00a0its buy recommendation for Chinese stocks, following similar moves by former China bulls UBS Global Wealth Management and Nomura.<\/p>\n

Investors again piled into government bonds despite the PBOC\u2019s constant pushback. The yield on the most actively traded 10-year government\u00a0bond\u00a0touched the lowest level on record Wednesday<\/strong>. There were signs that PBOC once again stepped in to\u00a0curb\u00a0the rally.<\/p>\n

<\/a><\/p>\n

3. Moving quickly to cut mortgage rates may be China\u2019s best shot to fight persistent deflation and the property slump<\/strong>.\u00a0Financial regulators proposed reducing rates on outstanding mortgages nationwide by a total of about 80 basis points, and the first\u00a0cut\u00a0may come in the next few weeks, according to people familiar with the matter.<\/p>\n

In May, the PBOC\u00a0relaxed\u00a0mortgage rules and made available 300 billion yuan ($42 billion) of funding to buy unsold homes. A Bloomberg\u00a0index\u00a0of Chinese developer stocks has dropped more than a third since then as the rescue efforts\u00a0failed\u00a0to lift home sales.<\/p>\n

Existing homeowners were left out, as the steps taken in May mostly benefited new buyers. The new plan targets existing borrowers and may be the PBOC\u2019s best chance to shift market sentiment.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSun, 09\/08\/2024 – 22:13<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/china-faces-worst-deflationary-streak-1999<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

China Faces Worst Deflationary Streak Since 1999 By John Liu and Zheng Wu, Bloomberg markets live reporters and strategist Three things we learned last week:…<\/p>\n","protected":false},"author":0,"featured_media":1488736,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1488735","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1488735","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1488735"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1488735\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1488736"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1488735"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1488735"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1488735"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}