"Yuanderful noises"

Five factories in Guangdong and Zhejiang have manufactured 90% (that’s more than a million) of the Vuvuzela’s being used by spectators at the World Cup. Those of us watching on TV will know only too well what a Vuvuzela is. But for monks and hermits, it is a 65 centimetre long plastic stadium horn which, when blown by its owner, generates 127 decibels. That’s louder than a lawmower, and when blown in unison, they sound like a swarm of angry bees. Whether you love or hate them – they simply can’t be ignored.

China blew the monetary equivalent of a Vuvuzlea on Saturday evening when the PBOC broadcast that it will abandon the Yuan’s peg to the US dollar, allow greater exchange rate flexibility and a managed float against a basket of currencies. There is some debate about the actual wording and any large scale appreciation has been ruled out (Yuan Forwards point to 2.9%). Nonetheless, it is bold and judiciously timed step (ahead of the G20) and one which underlines China’s confidence in its economy, albeit where some fine tuning of inflation may have been needed. And, as a further olive branch to the US, the Nation’s sovereign wealth fund bought more US Treasury notes and bonds. It is not, as Morgan Stanley’s Stephen Roach said, “a pancea for an unbalanced global economy”; but it is a start. Similarly, some domestic exporters are worried (as highlighted particularly in the China Securities Journal) about their future competitiveness. However, there could also be competing benefits from domestic demand.

Vuvuzela – which means “making a noise”.

Shanghai Composite:
Today: +2.43% at 2,574.34 at 13.52
Last week: -2.2%
YTD: -21.4%

Hang Seng:
Today: +2.84% at 20,863.18 at 12.35
This week: +2.1%
YTD: -7.3%

Oil:
$78.76
Gold:
$1261.60 (new records being broken daily)
Euro/$
1.2459

• Stocks/commodities surge as China ends Yuan/USD peg
• China signals an end to the Yuan’s two-year peg to the dollar
• US Senator Schumer calls Yuan statement vague and limited
• Chinese exports to be hurt by big Yuan gains, say newspapers
• Hu buys time at G-20 with Yuan announcement
• China backs US with Treasury holdings rise to $900 billion
• Bank and property stocks raised at Morgan Stanley
• Qatar said to invest $2.8 billion in AgriBank IPO
• China Railway to sell shares up to Yuan 6.24 billion
• Australia and China Sign trade pacts worth $8.8 billion
• China mine blast kills at least 46
• China storms death toll rises to 88; more rain is forecast