“A scent of jasmine and a rasp of sand”

These are the words of writer James Morris and I think we all know what he means, as Oman now joins the Middle East and North African democracy bun-fight. As I noted on Friday, too, China has not been spared the so-called “Jasmine Revolution” either, although the scale of anti-Government demonstrations is impossible to determine or estimate.

What is clear, though, is that the rallying cry via the Internet has been vociferous and persistent (despite LinkedIn being down for 24 hours Friday through Saturday). The police presence has also been the same and, on Sunday in Shanghai, at least 23 police vehicles were stationed around Shanghai’s Peace Cinema in the shopping area of People’s Square. Similarly, the police in Beijing co-opted paramilitary units with Rottweilers and German Shepherds. Several foreign journalists were also removed from the streets and/or asked, by telephone, to “obey reporting rules”.

An open letter from a US sourced website named Boxun.com called on people to gather in at least 27 sites around the country for Jasmine rallies. “Come out and take a stroll at two o’clock on Sundays to look around”. It also called for the Communist Party to fight corruption, create an independent judiciary and reduce income inequality; or else “exit the stage of history”. The letter added, too, that economic growth in both Taiwan and South Korea had been achieved with a much more equitable spread of income levels.

By way of defence, Premier Wen Jiabao used the internet himself for an online two hour interview with Chinese citizens on the site of the official Xinhua News Agency. Herein, he promised much, including control of inflation and punishment of any abuse of power by the Government and/or officials. Wen also pledged to boost agricultural production and punish hoarding and price manipulation; plus he claimed that the Country has sufficient grain and foreign currency reserves to control food prices. “Growing inequality is a threat to social stability”.

More broadly, and by way of a sneak preview of the National People’s Congress (from 5 March), Wen said that the Nation has set a lower growth target for the period from 2011 through 2015 - in order to foster a more sustainable economy. This means that the Government has set annual economic growth at 7.0% for its 12th five year plan. Previously, China’s target was 7.5% for the period from 2006 to 2010, with actual growth exceeding that each year. “We want to put the emphasis of our work on the quality and the benefits of economic growth. We want the fruits of development to benefit the people”. China cannot “blindly” pursue economic growth that is unsustainable, he added. Generally, too, these comments were welcomed by commentators.

Wen also spoke about property and house prices, with an emphasis on controlling speculators and prices; and using legal and economic measures against those who hoard land. Best of all, though, Wen said China will build 36 million affordable houses over the next five years. Little wonder, then, that the share prices of cement manufacturers rose. The Yuan also rose close to a 17 year high as the Chinese Premier (leaving no stone unturned) said a stronger currency will benefit the Nation’s economy.

In fact, the whole market had a not-too-bad-a-day (+0.9%) this Monday either, but the really good news is that February (+4.1%) showed the first month-on-month rise in the Shanghai Composite since October. This also means that in the year-to-date, the Index has risen by 3.5%.

“The word February is believed to have derived from the name ‘Februa’ taken from the Roman Festival of Purification” - Mystical WWW

Shanghai Composite:
Today: +0.92% to 2,905.05 at close
Last week: -0.7%
February: +4.1%
Since 5 July: +22.9%
Since 8 Nov: -8.1%
YTD: +3.5%

Hang Seng:
Today: +1.42% to 23,338.02 at close
Last week: -2.5%
February: -0.5%
Since 25 May: +22.9%
Since 8 Nov: -6.5%
YTD: +1.3%

Oil futures: $99.31
Gold futures: $1412.40
(new ‘immediate delivery’ high of $1431.25 on 7 December)
Euro/$ spot: 1.3784

JASMINE
• Wen promises to control inflation as the ‘Jasmine Revolution’ percolates; and he will also punish the ‘abuse of power’ by Government and/or officials
• Economic growth target reduced to 7% amid calls for sustainability
• Wen opines on property too
• Wen pledges to combat graft and improve income inequality, as police seek to neutralise protests

MONEY
• Repo rate falls to lowest level in a week as interest rate swaps touch to a two week low - as PBOC injects $39 billion into the system
• Yuan rises back towards its 17 year peak after Premier Wen says a strong currency is beneficial; as Forwards point to a further +2.4%
• China's return on FX investments dip

EQUITIES, DOMESTIC & INTERNATIONAL
• Shares in February show their first monthly rise (+4.1%) since October; as Wen announces plans to build 36 million affordable homes over the next five years
• Lowly rated bank shares are barometer for economy
• China’s 2010 energy consumption rises 5.9%; but falls 4.01% per unit of GDP
• Chinese banks will increase lending to Greek shipping industry

IRON & STEEL
• Record iron ore prices loom, says FT; and China sets new record for imports in January (69 million tons)
• Rio and BHP may raise Q2 iron ore prices by at least 23%