Thursday, 27 February 2014

The Dragon Falters

The heavy selling pressure in the Chinese Yuan continues unabated.    This may cause unwinding
of the Yuan carry trade at some point of time.    This development coupled with the acceleration,
if undertaken by the US Federal Reserve Bank,  of tapering of the Quantitative Easing program
could trigger a cascading effect in the global markets.

Carry trades involve borrowing funds in a nation with low interest rates to purchase high yielding
assets elsewhere.    The initial cracks in the Chinese shadow banking system appears to be
surfacing.    The dragon is stumbling.

1 comment:

  1. • Motherson has offered 23.55 euros per PKC share, representing a 51 percent premium to PKC's closing price on Thursday.