Monetary Policy to be relaxed even further
than 2011
2011 was
a rough year for many businesses in China.
However, this year businesses are anticipating a bit of an easier time.
The People’s Bank of China has already lowered the bank’s reserve twice this
year signaling a more relaxed control of the money supply. Add to that, the decline in the rate of
economic growth suggest that further monetary loosening should be
expected.
Reduction of Inflation
2011 the
big problem was 2011 with the Chinese government doing everything in its power
to keep it from blowing up. But even
though January’s CPI was more than expected, many experts are pretty confident
that February and March numbers will show a reduction.
RMB losing momentum
Despite
the whining from the politicians from the west, RMB has actually risen in value for past few years. But signs are
showing that RMB is losing some momentum. This
is mainly due to the global economy being in complete mess so the demand for China’s
goods have reduced dramatically. This
may cause investors to start looking into other currencies in the FX market.
A better stock market
Most
experts believed that the worst time has past for the stock market. They believe the market have gotten used to the good news/bad news rotation coming out from Europe and
the US. Volatility has reduced and the prices have reached their bottom. Many bankers are anticipating a pick up in stock investments by their clients.
Real estate is dead
Compared
to the stock market, the real estate market is dryer than the Sahara desert. Although property prices have not seen any further drop recently which would suggests that the market may have hit bottom, neither do people see prices going up any time soon. The control put in place by the Chinese government have nearly put all the
speculators out of business.
