China Tells

A lot of people complain that the equity and property markets in China have become a gigantic casino , such a casino that only the bold, the lucky or the insider gets an upper hand. Today I am not here to judge the nature of such speculative market. However, what I would like to show here, is that there is a good reason for such a speculative mania - if there is one in China for the moment. According to the latest statistics released by National Bureau of Statistics, China’s CPI in Oct increased 4.4% y-o-y. Anecdotely, people start to feel that the price of everything seems going up, except salary. In fact, we are talking about an economy with a 10% real GDP growth and 4.4% inflationary growth, with a bank deposit rate for about  2.5% for 1-year fixed deposit. No wonder people don’t want to leave their saving in the bank any more. According to the above graph, we can see a clear trend that people are starting to draw their deposit out of the banks – in the hope that they can get a slightly better return for the idle cash. How this saga ends remains to be seen – however, from a variety of perspectives it seems that the speculative mania is growing in China which has a large chance to result in some big bubbles in a few sectors.

最近的股市应该是可以看好的，主要原因是银行利率太低，导致资本不得不撤出银行去追求高风险收益。中国三季度的经济增长达到了9.6%，通胀达到4.4%，但是银行1年存款利率只有2.5%。无怪乎没人愿意把钱再存在银行里了。因此，股市，房市，期货，大豆，大蒜，白糖，等等只要你能想得到的，无处不见游资的身影。这样的泡沫状态着实让人担忧。