China’s central bank said over the weekend it will lower the reserve requirement ratio (RRR) that banks must hold as reserves to 20.5 percent from 21 percent, effective Friday. This 50 basis points (bp) reduction will free up tens of billions of dollars for loans at a time when the growth rate is expected to drop from last quarter’s 8.9 percent to closer to 8 percent. This is the second rate cut in two months.
Chinese real construction companies, and global commodity stocks, especially base metals like copper and aluminium, should benefit from this move. Investors hoping for more lending in the real estate sector pushed up Chinese property shares and banks. Hong Kong-listed China Resources Land Ltd. rose 1 percent and China Overseas Land & Investment Ltd. added 1.3 percent. China Construction Bank Corp. added 1.1 percent.
World stock markets were also positive on hope that Greece will clinch the aid to avoid bankruptcy. Whether Greece can actually implement and deliver an auterity plan is not a consideration for now! Continue reading China reduces Reserve Requirement Ratio by 50bp→
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Global Economic Data Review for the week ended Friday, 27 May 2011.
Nymex crude traded within a tight range of $ 97 -$100/ barrel for the week. Crude could spike up to $120 if middle east tension moves any higher. Crude oil price rise will harm world economic growth in the near term. Much of the price rise is speculative, hence the negative impact from price rise.
The week witnessed negative economic data from US. The report from the Commerce Department indicated, a bigger than expected drop in durable goods orders by 3.6% in April following an upwardly revised 4.4% increase in March. According to the report, 424,000 Americans filed initial claims for unemployment insurance, an increase of 10,000 from the previous weeks revised figure of 4,14,000. Continue reading Economic Data Review -29May2011→