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Financial News quoted People's Bank of China (PBOC) chief economist Ma Jun, noting that the ratings agencies were too pessimistic in downgrading their outlooks.
Moody's and S&P were too pessimistic in downgrading their outlooks for China and the ratings of some local companies
Recent data shows economic recovery: property investment has started increasing and industrial profit growth turned positive for the first two months of the year and the March PMI rebounded.
Concerns about China are increasingly likely to spread fear to financial markets and lead to poor stock performance in the United States and other developed countries, the International Monetary Fund said Monday.
Equity market contagion from leading emerging markets affecting advanced economies has risen 28 percent since the 2008 global financial crisis, The Wall Street Journal reported, citing IMF calculations.
Average equity return spillovers from emerging market economies to other emerging markets and to advanced economies rose by 28 percent following the crisis— increasing more strongly to emerging market than to advanced economies. Spillovers from some of the largest emerging market economies (Brazil, China, India, Russia, South Africa) have risen by 40 percent according to IMF.
China’s financial system has relatively small direct linkages to economies such as that of the United States, compared with the banking and financial ties of other big economies, such as Japan’s.
Meanwhile, exports make up a relatively small part of the US economy, so worries about China’s economic health shouldn’t sink the outlook for most US companies.
But the IMF found that China appears to have a special ability to trigger market moves in other countries based on the release of economic news and data.
“We do see China as unique so far, in terms of news about its economic performance affecting markets elsewhere,” said Gaston Gelos, the IMF division chief for monetary and capital markets who headed the report on global financial market stability.
Sometimes, there is a fundamental connection, such as when commodity producers’ stocks decline on days when China’s industrial giants swoon, the report said.
Bank of Japan Governor Haruhiko Kuroda said Tuesday that he will act quickly to strengthen monetary easing measures if needed, although he left the timing up in the air by playing down worries about a listless economy.
Speaking in parliament, Kuroda reiterated his stance to “undertake additional monetary easing without hesitation” if necessary, either by increasing the central bank’s asset purchases or by lowering its deposit rate further below zero, or both. The BOJ started in February to impose a minus 0.1% rate on some deposits held by commercial banks.
The BOJ will determine its approach by looking at economic and financial conditions at a given time, and it is “difficult to decide in advance that we will boost quantity under this kind of situation, and will use interest rates under that kind of situation,” he said.
Oil prices dropped for a third session in a row on Tuesday, as weakening demand for gasoline and persistent doubts on whether crude producers will be able to reach an agreement to rein in a worldwide supply glut dragged on the market.
Growth in gasoline use has been one of the strongest pillars supporting demand across the fuel complex in both North America and Asia and has been largely credited for providing a floor under crude prices that have slumped as much as 70 percent since mid-2014 due surplus supply.
The decline on Tuesday follows data showing U.S. gasoline demand during January fell for the first time in 14 months, while overall U.S. oil demand fell 1 percent that month from a year ago.
Front month U.S. West Texas Intermediate (WTI) crude was trading at $35.51 per barrel at 0652 GMT, down 19 cents from their last settlement. International Brent futures were down 9 cents at $37.60 per barrel.
The Organization of the Petroleum Exporting Countries and other big producers are set to meet in Doha, Qatar in two weeks to discuss the plan.
But prospects for a deal look dim, with the Saudis declining to participate without Iran, and Russia reporting its highest output in 30 years just weeks before the meeting.
Reference: FXStreet, Ejinsight
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