Friday, December 2, 2011

PBoC news

Here is collection of various reports  concerning PBoC....


M2 statistical coverage has been changed.

It now includes 2 new items...
1) Deposits of non-deposit-taking financial institutions (Investment Banking, Wholesale Banking)  in deposit-taking financial institutions
2) Deposits of housing provident fund
The change is to reflect and take into account the development  and use of  newer financial instruments. Both are already in substantial volume and have relatively large impact on money supply.

Based on the expanded coverage,
M2 posted 81.68t RMB (in Oct 2011)  and 72.35t RMB (in Oct 2010),
OR 12.9% yoy UP.
That is, (81.68-72.35)/72.35*100%=12.9%.

Note that this is  already reflected in the Oct 2011 statistics

FOREX Reserves

Officially stands at  USD 3.2t

 Home Prices

A Reuters report dated December 2, 2011, says that the PBoC think that Home Prices are at a turning point.
          BEIJING -
Chinese home prices are at a turning point and banks are concerned about a possible 'chain reaction' if they were to fall by 20 per cent, the central bank said on Friday.
'Real estate investment growth eased, developers' cash flows tightened, land transactions and prices fell, property loan growth moderated and there are early signs that property prices are at a turning point,' the People's Bank of China said in a statement published on its website.
Chinese home prices fell in October from September for the first time this year, official data showed, but a private survey has indicated that November could mark a third consecutive monthly fall

What does this means, in policy terms?
Likely, there will be a turning point in the monetary policies.
The polcymakers wants to see a gradual incremental trend in housing prices.
NOT a precipitous 20% drop that will have drastic consequences on banks and their NPLs.

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