Surprisingly, the DI needed very little correction to the JPY value in recent years. Having that said, if there is a sharp rise in the DI later, it suggests that policies transferred into the real economy, which might back the BoJ to act further.
To view the image associated with this press release, please visit the following link: http://media3.marketwire.com/docs/JPYU1.jpg
Source: Bloomberg, FXPRIMUS
Chinese reforms: credit growth threatened by new rules for housing and wealth management product (WMP) markets
Regardless of recent measures implemented on the housing market and banks' WMPs to curb growth, inflation or regulate shadow banking, the credit growth might start fading gradually after aggregate financing activities boomed in late 2012.
The Shanghai Composite Index ended the latest leg in its rally, which I believe was lead by property purchase restrictions and new regulations tightening shadow banking activities.
To view the image associated with this press release, please visit the following link: http://media3.marketwire.com/docs/SHAN1.jpg
Source: Bloomberg, FXPRIMUS
Regulators aim at short-term and high-yield WMPs at this stage, requesting banks to link each WMP to specific assets, rather than an undifferentiated pool in the past, as well as more inflation for issuers to declare. Besides that, all new issued WMPs of a single bank must be below 35% of its total outstanding WMPs, and it cannot exceed 4% of the banks' total assets.
The property market, a large contributor to Chinese growth, is set to have a more complicated environment in the short term, due to recent massive deals after the "guo wu" ruling announced. Beijing just banned single-person households from buying more than one residence, and Shanghai prohibited banks from giving housing loans for third-home purchasers.
ABOUT MARIO SANT SINGH
Mario Singh is the Director of Training & Education at global retail Forex brokerage FXPRIMUS. He has appeared as a guest expert on CNBC more than 35 times to talk about foreign exchange markets, and is a regular contributor to top investment publications and online portals. Known as a brilliant and intense communicator with a unique ability to 'keep Forex simple' and a mission to help every man-in-the-street to trade profitably and responsibly in the Forex market, more than 20,000 people have attended his Forex trading programs. He is the only Forex trader in Asia invited to train Julius Baer Private Bankers - the third largest Swiss Bank, and ICBC, China's largest commercial bank. Mario is also author of the best-selling book, 17 Proven Currency Trading Strategies: How to Profit in the Forex Market. (Wiley Publishing).
FXPRIMUS offers retail traders a level of trade execution, service quality and fund safety that are normally reserved only for the largest investors. Serving traders in 205 countries across 6 continents FXPRIMUS combines an unmatched level of fund safety with regular independent audits of company financials and Straight Through Processing, top notch execution with tight spreads, prompt and responsive customer support, ISO 27001 certification in Information Security and an industry-leading trader toolset that includes free access to powerful trader tools and personal coaching via FXPRIMUS Coach FXPRIMUS truly is The Safest Place To Trade.
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