"Money never sleeps"

In London this week, ‘Wall Street 2’, the movie, subtitled ‘money never sleeps’ opened and it is very good. It focuses, this time around, on the machinations of the US and other governments during the global financial crisis. Perhaps, then, I should not have been surprised to bump into Mervyn King, Governor of the Bank of England in the foyer of the cinema. I was with my wife, whereas Mervyn was accompanied by two fresh-faced body guards.

Over a dry sherry during the intermission, I asked him how the job was going. He said “you know, Tony, I am a bit fed up to tell you the truth. As a country we have no money, only debts, nobody wants to hold the British Pound and it will all probably get worse before it gets better. What I wouldn’t give to have Zhou Xiaochuan’s job (Zhou is the PBOC Governor). He’s got currency reserves of $2.45 billion, a fast growing economy and everyone wants to be his friend. Okay, there’s a bit of local difficulty over the value of the Yuan. But I agree with him and Wen. They talk about gradually increasing flexibility and appreciation. They are also at pains to point out that the value of the Yuan is no ‘silver bullet’ to solving the World’s economic issues – either per se or relative. To be fair, too, the Yuan is now at its highest level since 1993”.

“To make my envy even worse, I read in your blog this week that Moody’s is thinking about upgrading China’s debt rating, which is good news for them; and, retail sales over the National holidays leapt 18.7%. Those clever people at Goldman Sachs and JPMorgan also say that the Government will focus on boosting domestic consumption over the next five years, which is further good news. Okay, there is the odd pocket of over zealous house price inflation, but the Government has looked to fine tune this and not kill the market. For example, in Shanghai its latest move to restrict home purchases to one per household and increase land supply looks pretty sensible. In my view, China is strong frugal, well managed and won’t lose money or its advantage”.

“Money’s the bitch that never sleeps and if you don’t keep an eye on her, then you wake up in the morning and she’s gone” - Gordon Gekko

Shanghai Composite:
Thursday: +3.13% at 2,738.72 at close
(best since 6 May 2010)
This week: +3.1%
Last week: +2.5%
YTD: -16.4%

Hang Seng:
Today: +0.26% at 22,944.18 at close
(narrowly best since 24 July 2008)
This week: +2.6%
YTD: +4.9%

Oil futures: $81.68
Gold futures: $1333.70
(new immediate delivery ‘high’ of $1364.77)
Euro/$ spot: 1.3942

Headlines

• Yuan climbs to strongest level since 1993; retail sales surge; and share prices hit five month high
• Wen and Yi say they will do their bit on currency and economy
• China's credit rating may be raised by Moody's
• Shanghai restrains real estate market
• China digs its toes in on rapid Yuan appreciation
• IMF says that China and Asia should set about allowing stronger, flexible currencies
• Geithner highlights currency and risk
• Don’t expect currency accords, says IMF
• Italy and China agree to more than double trade to $100 billion in five years
• China to strengthen local demand in five year plan, says Goldman and JPMorgan
• Asia’s reserves rise at $2 billion per day
• China to face water shortages
• Hainan Province evacuates 130,000 people due to flooding, says Xinhua
• $33 million paid for Chinese vase at auction in HK