The cost of borrowing in China’s interbank market is the most expensive on record for the start of a year. That suggests that the People’s Bank of China (PBOC) is not finished easing policy.
The seven-day repurchase rate was 4.41 percent on average so far this year, up from 4.16 percent a year earlier and the highest for the period since the fixing began in 2004.
Australia & New Zealand Banking Group Ltd and AXA Investment Managers Ltd foresee a reserve-requirement ratio cut this month, while Barclays Plc predicts one “in the coming weeks.”
Two benchmark interest-rate reductions and one lowering of banks’ reserve ratios in four months failed to bring borrowing costs down, as the second-largest economy in the world faces capital outflows that drain cash.
Chinese Premier Li Keqiang (李克強) on Sunday told reporters that policymakers will act if growth, which the government targeted at about 7 percent this year, drifts toward the lower limit of its range and cuts into employment or wages.
“I’m in the camp expecting a reserve-requirement cut,” Rajeev De Mello, who manages about US$10 billion as head of Asian fixed income at Schroder Investment Management Ltd in Singapore, said in an interview on Thursday last week.
“Interbank rates are not showing any signs of coming down. That worries me a bit because that shows liquidity in China is still very tight,” he said.
Schroder has been buying onshore five and 10-year sovereign bonds because it expects yields to fall as the economy slows, De Mello said.
The asset manager sees a 50 basis-point cut in the required reserve ratio.
The yield on 2020 government notes fell 23 basis points this year to 3.283 percent as data on factory output and retail sales released in the past week trailed estimates. The one-year interest-rate swap, the fixed cost to receive the floating repo rate that indicates cash availability, climbed 20 basis points this year and touched a six-month high of 3.7 percent on Monday last week.
Industrial production rose 6.8 percent in the January-February period from a year earlier, compared with the 7.7 percent median estimate in a Bloomberg survey, official reports showed Wednesday last week. Retail sales increased 10.7 percent, shy of the 11.6 percent forecast.
“What these data represent is that the economy is slowing,” Mirza Baig, Singapore-based head of foreign exchange and interest-rate strategy at BNP Paribas SA, said in a telephone interview on Thursday last week. “Overall financial conditions are tight for the economy and bode well for more easing. We are expecting a reserve-ratio cut so that money-market rates can normalize.”
Not all of China’s economic indicators were bad. Exports grew more than 48 percent last month, distorted by the Lunar New Year holidays. That beat an estimate of 14 percent.
Aggregate financing, the broadest measure of new credit, was a forecast-beating 1.35 trillion yuan (US$215.7 billion).
M2 money supply rose 12.5 percent from a year earlier, compared with the forecast of 11 percent.
The nation’s money supply growth is appropriate and a new normal of slower economic expansion does not mean there will be a switch from a prudent policy stance, PBOC Governor Zhou Xiaochuan (周小川) said in Beijing on Thursday last week.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
FUTURE PLANS: Although the electric vehicle market is getting more competitive, Hon Hai would stick to its goal of seizing a 5 percent share globally, Young Liu said Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler and supplier of artificial intelligence (AI) servers powered by Nvidia Corp’s chips, yesterday said it has introduced a rotating chief executive structure as part of the company’s efforts to cultivate future leaders and to enhance corporate governance. The 50-year-old contract electronics maker reported sizable revenue of NT$6.16 trillion (US$189.67 billion) last year. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), has been under the control of one man almost since its inception. A rotating CEO system is a rarity among Taiwanese businesses. Hon Hai has given leaders of the company’s six