GS 高盛-中国每日报告 07.31

China-Daily-Insights 07.31 11页

Today’s focus
China Views: The PBOC raised the reserve requirement ratio by 50 basis points
China Economics Quarterly - Issue 2007/02
New Oriental Education & Technology Group Inc. (ADR) (EDU) Buy: Add to Conviction Buy - over-reaction to results, still secular growth
Zhengzhou Yutong Bus (600066.SS): 1H07 earnings up 37% yoy, in line with our expectation
ASM Pacific Technology (0522.HK): First Take - Strong 2Q results and new order bookings
China Yangtze Power (600900.SS): In-line 1H07 results mostly gained from CCB share sales
Headline news
End-March foreign debt hits $331.562b (China Daily)
30 firms banned from bank loans for pollution violations (China Daily)
Expert: Market forces to squeeze China's securities sector (Xinhua)
China should raise resources tax to encourage energy saving: expert (People’s Daily)
IMF's Rato - China currency policy constrains all Asia (Reuters)
China Views: The PBOC raised the reserve requirement ratio by 50 basis points, Hong Liang
• This is the sixth RRR hike in 2007, and the ninth in the past 12 months. The hike is likely driven by the 4.4% CPI inflation in June and the increasing need for liquidity sterilization caused by the intensified external imbalance. Frequent adjustments in RRR highlight the challenges facing the PBOC to conduct monetary policy under a very open economy with a significantly undervalued currency.
• The past two years’ experience in China has shown that RRR changes are ineffective policy tool to control monetary expansion. With the excess reserve ratio likely standing at about 2%-3%, a 50 bp increase in the RRR is not binding on banks’ capabilities to lend.
• In the short run, the reserve requirement hike may push up market interest rates and the yield curve