The Chinese equity markets are going to open tomorrow, and before that happens those of you interested in it might want to read more on the general sentiment by China-watchers after the dust settled and willing interview targets were found by Bloomberg.
Highlights of this include more interest rate liberalization as banks are now allowed to pay deposit rates of up to 120% of the reference rate, versus 110% before. Thus deposit rates can be essentially unchanged without any inclination for a bank run, but having the net effect of lowering margins. If this is however then used for things like SME lending in the long run, banks might find a way to get margins back in other ways, as long as they retain the deposits. Otherwise there is not too much news here that frequent China-watchers will not have heard of or thought of before. Getting a little tired of hearing about the central bank divergence story since it’s so often used to fuel an undercurrent of currency manipulation charges, but otherwise it is a pretty good article.
Hong Kong (and global) markets have reacted extremely positively to the news, and the exuberance has generally been matched to how much exposure said economy/index has to China. I wonder, if my prediction of roughly 3% market gains in China tomorrow actually comes true, how many stocks will hit the circuit breakers on the Shanghai Stock Exchange board?
What do you readers think? To provide some incentive for actual commenting here, I’ll update this post with whoever posts a comment with the closest prediction by 1:00 pm China Standard Time (05:00 am GMT) tomorrow, November 24th, 2014. This means that it is fair game to guess up until the opening bell rings for the afternoon session of the day in question!
I’ll give your screen name, a blog and blog post of your choice (subject to a remote level of decency), plus the guess. If you have a finance- or economics-related blog, I will also look into re-blogging a whole post. A re-blog will also be offered to anyone with finance/econ posts that is an avid-enough reader of S3 to read this between posting and the market opening, and is brave enough provide a comment. The scoring will be as follows: the lowest natural logarithm-base error wins. Or, mathematically, minimize ( ln[ guess / actual ] )^2.
Featured post: TBA
Closest guess: TBA
Bloggers that can expect a reblog (offer valid for any post in the past or published before the end of November): TBA