Equities dance to the devaluation tune

Article Abstract:

China could devalue its currency in 2000, and is affected by a weakness in consumer demand and deflation in 1999. China sought to stimulate the economy through public spending which was 26.5% of gross domestic product in 1998, a level that cannot be sustained. The government argues that the economic slowdown is caused by an uncompetitive exchange rate. Any devaluation needed would only have to be minor to return China to pre-1997 levels in relation to its neighbors in the Far East. The currency is not traded outside China, so the dollar peg appears secure. The impact outside China is not expected to be great, and Chinese stock prices have already taken a devaluation into account, to some extent.

Exchange Rates, Currency devaluation, Devaluation (Currency)

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Question time

Article Abstract:

China has appeared to be more stable than other Asian financial markets, but this could change. Chinese stocks have already suffered from volatility. There is speculation that the Chinese yuan could be devalued following devaluations in other Asian countries. China needs strong exports in order to achieve economic growth of from 8% to 9%, and a high yuan could hit exports. A devalution could lead to problems with China's attempt to join the World Trade Organization and lead to more speculation against European currencies. Tight money, excess capacity and bad debts could also lead to deflation.

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China's army of gambling investors

Article Abstract:

Share trading has become popular in China with 22 million private investors, and stock exchange trading halls opened in major cities throughout China. New investors have not been deterred by higher barriers to entry. Many investors argue that they have to deal in stocks because of low pension levels, little protection for the unemployed and low interest rates paid on bank deposits. The market is affected by a number of hazards such as insider trading and opaque accounts, but this does not deter Chinese investors.

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