Chinese bond auction falls short
bbc.com
China's looks poised to tighten monetary and credit policies
China's finance ministry has failed to sell all 28bn yuan ($4.1bn; £2.55bn) of one-year government bonds it offered at an auction. It is the first under-subscribed government bond auction since 2003. The ministry sold a total of 27.52 billion yuan of the bonds, which offered a yield to investors of 1.06%.
It comes as the government looks to tighten its monetary policy to prevent the risk of asset bubbles, loan defaults and rapid inflation.
Meanwhile, the Chinese city of Hangzhou has started tightening mortgage lending terms, ahead of any changes to monetary and credit policies by the national government. The signs that China may ditch its loose monetary policy dragged down bank stocks in Hong Kong and Shanghai on Wednesday.
Chinese property prices nationwide have increased since March, after seven months of falls. The price increases follow measures introduced in the second half of 2008 to boost demand for housing, such as reduced mortgage rates. Hangzhou has doubled the minimum deposit for purchases of second homes to 40%, and also increased the rate on mortgages for second homes to 10% more than the benchmark set by the central bank.
*so everyone has believed (erroneously said I) that China will lead us out of our economic woes. If it happens here first, then all others likely to follow. China is just as greedy as we were, with even less regulation. A housing bubble about to burst? A friend said to me not long ago, "if China was doing so well then why does it need a half a trillion dollar stimulus?" However, this could be good for us. Let's face it folks, say what you will, but the US treasuries are still and will always be, the safest in the world.
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