Via SCMP:
China’s financial regulators are signalling that they will continue to tighten rules and slash leverage, regardless of the short-term pain their moves bring, keeping with President Xi Jinping’s order to prioritise financial security.
The Financial News, a publication under the People’s Bank of China (PBOC), said in a commentary on Monday that market participants should refrain from exaggerating small-market volatility, lest their actions disrupt regulators’ determination to enhance supervision amid a “mild deleveraging” of the marketplace.
“There’s no need to worry about the current monetary policy and regulatory policies,” the commentary said. “Stability remains the key tone.”
Investors, however, heavily sold off their holdings in China’s stock, bond and commodities futures markets in recent weeks, on the increased regulatory efforts and their increasingly hawkish tone.
The PBOC did not renew 230 billion yuan medium-term lending facilities mature last week, fueling concern that the era of easy money already has come to an end amid China’s deleveraging strategy and efforts aimed at preventing systemic risks.
On top of the release of a number of banking supervision regulations in the past two months – the latest one is collateral management guidance launched on Monday – , the Ministry of Finance has reiterated a ban on local governments’ implicit financial guarantees and debt raising.
You have been warned.
Meanwhile, the next few days will see a big focus shift to One Belt, One Road (OBOR). Bloomie has more:
I expect OBOR to under-deliver. The region is just too fractious. More here and here.
